ERIC Number: ED236527
Record Type: Non-Journal
Publication Date: 1981
Reference Count: N/A
How To Read an Annual Report. Power of the Printed Word.
Quinn, Jane Bryant
It is helpful to know how to read a company's annual report if an individual is considering going to work for the company, investing in it, or selling to it. When reading an annual report, start at the back with the report of the independent certified public accountant and the footnotes. These can provide information that is not readily apparent from the figures in the report. Next, turn to the letter from the chairman. This should tell how the company fared this year and why, as well as giving insights into the company's future. Now it is time to dig into the numbers. One source is the balance sheet which offers information on the company's assets and liabilities. Important numbers to watch are stockholders' equity, long-term debt, and the ratio between these numbers. A second basic source of numbers is the income statement. The first number to look for here is net sales and the rate at which sales are changing. Watch out for net earnings per share; it can be misleading. Don't be smug about net earnings until finding out what is behind them and what might happen next year. The most important thing of all is to compare the annual report to past reports. (DC)
Descriptors: Annual Reports, Business, Financial Problems, Guidelines, Information Seeking, Reading Comprehension
"Power of the Printed Word," International Paper Co., Dept. 8, P.O. Box 900, Elmsford, New York 10523.
Publication Type: Guides - Non-Classroom
Education Level: N/A
Audience: Community; Teachers; Practitioners
Authoring Institution: International Paper Co., New York, NY.