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Annual report


Annual report is an audited corporate document that details the business activity and financial status over the previous year. It became regular part of corporate financial reporting after stock market crash in 1929. Annual report is distributed to shareholders at the end of the year and SEC also requires from company to file annual report on the form 10-K. Annual report contains audited financial statement and other company related data like in dept information about company's products, services, competitors, management and legal proceedings. Investors can access reports through EDGAR (Electronic Data Gathering, Analysis and Retrieval) and download report for free.

Annual reports that is sent to shareholders and stakeholders consist of records of company's activities during the past year and financial and operational information. Included information are general corporate information,graphs and photos, financial and operating highlights, letter to shareholders from CEO, management's discussions and analysis (MD&A), financial statement and notes on it, auditors report, summary of financial data and accounting policies. Companies are required to post annual report as a part of proxy material under proxy rules. 10-K form provides shareholders with accurate, relevant and timely information that will help them make informed decisions, buy or sell stock or invest in company's corporate bonds. It is fairly long and complicated document but it is also one of the most important ones that company can issue. Any analysis of company by current and prospective investors, creditors or analysts will use annual to evaluate the company, its financial state and performance.

Form 10-K consists of five different sections: business, risk factors, selected financial data, MD&A and financial statement and supplementary data. Financial statement is one of the most important parts of the report. It has three main components: income statement,, balance sheet and cash flow statement. In simple terms income statement shows revenues and expenses for particular time period, in this case one year helping shareholders realize if company is profitable or not. Balance sheet shows company's net worth at a particular point in time by listing its assets (what company own), liabilities (what it owes) and equity. Balance sheet is an indicator of financial health for the company. Cash flow statement measures cash generated and used by a company in a given time, inspecting company's investing and financing activities. It is valued by investors because it is used to anticipate future success.

Annual report also includes auditor statement that certifies the validity of financial statement. Outside auditor ensures that statement truthfully reflects company's financial status and auditor's opinion whether company is compliant with GAAP (Generally Accepted Accounting Principles). SEC requires three years of audited financial statement, unless company is qualified like smaller reporting or emerging growth company when only two years of audited financial are required. Signed letters of company's CEO and CFO are included to assure accuracy of the statements in 10-K.

Deadlines for filing are different depending on the size of the company. Large accelerated filers (with $700 million or more in public float) have 60 days to file report. Accelerated filer (with public float between $75 and $700 million) have deadline of 75 days. Last, non accelerated filer (with public float less than $75 million) has the longest deadline of 90 days before they file 10K report.
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