Annual Report Analysis
Events
BI > JUNE 2006
What 's Important in an Annual Report
Running a Faster Paper Chase by Bob Adams
Editor 's note: This article is based on a class taught by Bob Adams at past CompuFest meetings and is just a sample of the excellent education available at the annual event organized by the Computer Group Advisory Board. This year 's meeting will be June 23-25 in Reno, Nev. Bob, a CGAB vice president, will teach sessions titled Advanced SSG Topics:
Judgment Aids; Take the Oops Out of the SSG; and Follow Your Stocks: A Monthly Analysis Tool. CompuFest 2006 details and registration information are available at www.compufest2006.com.
Corporate annual reports are important research tools that enable investors to keep current on the outlook for a company and to follow trends from year to year. Some key trends to watch are sales, profits, inventory, receivables and debt levels.
In addition, read the footnotes to ferret out pertinent information.
Annual reports have two major sections: the glossy paper at the beginning and the cheap paper everywhere else. The truly revealing information is on the mundane paper in the back and in the flimsy booklet for the annual meeting notice and proxy statement.
Buried a half dozen pages from the back of the proxy statement -- sometimes for good reason -- is a graph comparing the company 's stock price history with that of a peer group and of the S&P 500 index. This graph can 't be beat for a snapshot of a company 's performance.
Stay away from companies with numerous pages of explanatory notes except for industries such as banking that require many notes. Search for key words such as litigation, relationships, acquisitions and joint ventures. If you find any of these topics, scrutinize them closely. (Editor 's note: You probably can run a search for key words in PDFs of annual reports you download from the Internet. Check your Adobe software for this function.)
The relationships area of the annual report
BI > JUNE 2006
What 's Important in an Annual Report
Running a Faster Paper Chase by Bob Adams
Editor 's note: This article is based on a class taught by Bob Adams at past CompuFest meetings and is just a sample of the excellent education available at the annual event organized by the Computer Group Advisory Board. This year 's meeting will be June 23-25 in Reno, Nev. Bob, a CGAB vice president, will teach sessions titled Advanced SSG Topics:
Judgment Aids; Take the Oops Out of the SSG; and Follow Your Stocks: A Monthly Analysis Tool. CompuFest 2006 details and registration information are available at www.compufest2006.com.
Corporate annual reports are important research tools that enable investors to keep current on the outlook for a company and to follow trends from year to year. Some key trends to watch are sales, profits, inventory, receivables and debt levels.
In addition, read the footnotes to ferret out pertinent information.
Annual reports have two major sections: the glossy paper at the beginning and the cheap paper everywhere else. The truly revealing information is on the mundane paper in the back and in the flimsy booklet for the annual meeting notice and proxy statement.
Buried a half dozen pages from the back of the proxy statement -- sometimes for good reason -- is a graph comparing the company 's stock price history with that of a peer group and of the S&P 500 index. This graph can 't be beat for a snapshot of a company 's performance.
Stay away from companies with numerous pages of explanatory notes except for industries such as banking that require many notes. Search for key words such as litigation, relationships, acquisitions and joint ventures. If you find any of these topics, scrutinize them closely. (Editor 's note: You probably can run a search for key words in PDFs of annual reports you download from the Internet. Check your Adobe software for this function.)
The relationships area of the annual report