Annual reports are written for most businesses, especially if the company is public. This information is then printed and distributed to all shareholders. Public companies usually print glossy copies of these annual reports, which are often displayed in the reception area for clients and potential employees to view. Whether you are a business owner or corporate executive, there is a proper way to write an annual report.
An annual report is typically divided into five sections: The financial summary, letter to the shareholders, information on company operations, financial statement tables and biographies of the corporate executives.
The financial summary typically includes the following dollar amounts for the year: total revenue, expenses, net income and earning per share. It is just a snapshot of information. More detailed information will be displayed in the financial statement. A historical summary of figures should include not only the present year but the previous two years as well. You can also summarize notable increases or decreases from year-to-year.
A letter from the President or CEO of the company is often printed on the inside front page of the annual report. This letter formally addresses the shareholders or stock owners of the company. Shareholders either own common or preferred stock in the company.
The next section of the annual report should be devoted to the company operations. Often this information is a litany of articles about the company accompanied by colorful pictures to make the annual report more interesting. Operations can include business conditions, information on acquisitions, marketing plans, any restructuring of the organization, market research data and research and development issues.
The financial statement covers the revenue, expenses, net income and earnings per share in detail. The information is most usually displayed in tables for easy reference. This is the most important information contained in the annual report. It can be displayed in the middle or toward the back of the report.
The last part of the annual report should include a brief biography about all company officers. A picture is usually included of each individual as well as salient information about them. This section should feature these people in a positive light to instill confidence in the shareholders, despite what the financial situation of the company.
You will need to check the annual report for accuracy, then have accountants and attorneys do likewise. Attorneys will be able to determine whether your annual report is in compliance with regulations.