As you build a stock portfolio of brands you love, you may want to start keeping tabs on the companies you own stock in. One of the ways you can learn about the business activities of these companies is to check their annual report.
An annual report is a document put out by public corporations to its shareholders every year. Corporations are required by the Securities and Exchange Commission (SEC) to publish an annual report, and an accompanying document called a 10-K, which goes into much more detail.
What is in an annual report?
A company’s annual report details the company’s current financial state, and typically includes the following information:
- A general summary of activities, including graphics, photographs and text
- A letter from the CEO to shareholders
- Financial statements that detail cash flow, income and a balance sheet
- Management Discussion and Analysis (MD&A) - a section where company executives take a deep dive into company performance (current challenges, company goals, new products and services, and other planned actions)
- A report from the auditor
- A summary of financial data in the report
Where can I find an annual report?
If you own shares through Bumped—even fractional shares—you’ll receive an annual meeting notification from companies you own shares in. Look out for the annual report link in this email, just under the proxy voting section.
You can also find annual reports on companies’ websites.
What can I learn from an Annual Report?
By reading the annual report, you should be able to garner the following information:
- Company cash flow, profit, loss, and debts owed
- Total expenses vs revenue generated
- Growth potential over the coming years
- Dividend plans for the next fiscal year
- Insight into company culture and leadership style
- Company plans and goals
Annual reports may seem large and overwhelming at first, but knowledge gained by reading them can help you make informed decisions about your stock portfolio in the future.