By Patricia Uceda, Spring 2014 Student Intern
Now that you’ve learned how to compare your portfolio to indices, it’s time to take our next step to be an informed investor: viewing a company’s annual reports. A company’s annual report is a comprehensive report listing the company’s activities over the past year that is provided annually to shareholders. It contains detailed financial and operational information that you should keep an eye on if you own or wish to buy stock in a certain company. It typically consists of the following sections: 1) financial highlights; 2) letter to the shareholders; 3) narrative text, graphics, and photos; 4) management’s discussion and analysis; 5) financial statements; 6) notes to financial statements; 7) auditor’s report; 8) summary financial data; and 9) corporate information. Annual reports, quarterly reports, prospectuses, and other filings can all be accessed on the SEC website. You should utilize these reports to review companies for yourself before you invest in them based on your financial adviser’s recommendation. A good way to do that is by looking over the “Risk Factor” section, in which companies list all risk factors affecting their business. Additionally, review the financial data to see how the company did the year before in terms of net income or losses. In this way you can ensure that the company is a good financial fit for you.