What is an “Annual Report”?

An annual report is a document that showcases the financial performance and operating activities of a company during a given fiscal year. The company prepares and distributes the annual report (in print and digitally) to all shareholders in advance of the company’s annual shareholder meeting.

A typical annual report is quite lengthy, with glossy images and photos, and is usually professionally printed and bound.  The report is primarily an informative summary of a company’s activities during a given fiscal year. However, it can also include images or information which highlights the company’s mission, values, history and legacy, people and culture, products and services, forward strategy and business plan, etc.

The main components generally included in an annual report are:

Letters from Chairperson and CEO:  Addressed to shareholders, both provide a summary of the company’s financial and operating performance during the year from their perspective, highlighting specific achievements or events that the company wants to share publicly.

Year in Review:  A summary of the year’s key events and accomplishments, activities, and short-term objectives or goals are described with visual photo images, charts, and diagrams. Occasionally this is included with the CEO comments or it can be separate.

Company History / Business Overview: Chronological review of a company’s significant milestones. Segmented financial and operating performance by geographic regions, divisions, products, or subsidiaries. Market segment information for revenues, operating profit, or net income.

Auditor’s Report: If the company’s financial statements conform to the generally accepted accounting principles (GAAP) in the US, the auditor will confirm and provide an “unqualified opinion”.  Conversely, a “qualified opinion” indicates that there are issues or concerns related to the internal financial reporting process.

Financial Statements: Detailed income statement, balance sheet, and cash flow statement for the fiscal year including the figures from the previous year for comparison.  Companies may also provide summary financials for the last five or ten years, balance sheet summaries (accounts receivables, property plant & equipment, deferred revenues and taxes, changes in equity account, etc.).  In addition, a company may include supporting charts or graphs.    

Notes to the Financial Statements:  Detailed notes for the fiscal year and (sometimes previous years) related to specific line items from the key financial statements.  For example, a company may provide detailed financials related to an acquisition, pension funds and lease payments are segmented by type and year, loan or debt portfolio is broken down by facility or type of loan (term, maturity, coupon or interest rate, etc.), stock options are broken down by type, date issued, strike price, etc.

General Corporate Information: Including, but not limited to, company contact information (address, website, investor relations contact), legal and accounting firms employed by the company, stock performance (12 months high, low, and average stock price), stock exchange listing information, clearing house contact, registered agent, etc.

Officers & Directors: List of names and profiles of the company’s officers and directors.

In addition to distributing the annual report to existing shareholders prior to the annual shareholder’s meeting, American companies submit an abridged, simplified version of their annual reports (known as a 10-K) to the US Securities and Exchange Commission (SEC). The SEC is a large US government agency that was created to enforce the law against market manipulation following the Wall Street Crash of 1929. The submission is normally made digitally through the SEC’s EDGAR database. The company may also include a digital version on their company’s website, under investor relations.

Annual reports may also be prepared by small or large non-public corporations, non-profit organizations, or partnerships, and distributed to their investors as required or the public for marketing or fundraising-related purposes. Annual reports are occasionally referred to as yearly statements or yearly reports.

In addition to existing shareholders, other parties may also be interested in reviewing the annual report, including potential new investors trying to determine whether to purchase stock in the company, market research analysts preparing equity or credit reports, employees who may have stock options in the company, customers considering a business relationship with the company and competitors wishing to understand the industry and competitive advantage.

Key Learning Points

  • Annual reports are documents that provide the financial performance and operating activities of a company for the previous fiscal year
  • Companies distribute the annual report to their shareholders on record prior to the annual shareholder’s meeting
  • Key components of an annual report include letters from the chairperson and the CEO, year in review, segmented business review, auditor’s report, financial statements and notes, officers & directors, and general corporate information
  • Annual reports can be found on a company’s website or in SEC’s Edgar database (if the company is trading on a US Exchange)
  • Annual Reports and 10-Ks contain similar information, but differ in the style/format, key sections, and the timing for delivery of the documents

More Detail

An annual report and a 10-K are sometimes confused as being the same document, however, there are key differences:

Style/Format:  An annual report is more visually appealing with photos, images, graphics, and the use of color and different fonts. A 10-K is very basic, and while it may have a chart or brand logos, it does not include photos; the narrative is in a simple font, and the text is in black. In the U.S. the SEC issues guidelines to the company’s 10-K which indicates what and where information is included in the document.

Main Components: A 10-K has five specific sections and a specific order that all companies must follow. These five sections in order are company overview (includes operations, products, services, market segments, etc.), risk assessment (outline of all potential risks a company faces), last five years summary financials, management discussion & analysis (detailed narrative regarding the company’s financial performance) and financial statements (income statement, balance sheet, cash flow statement, notes to the financial statements). An annual report may have similar information, but the format, order, and level of detail vary by company. Generally speaking, the annual report is a much easier document to review and the information is easier to digest compared to the format and level of detail in a 10-K.

Timing:  An annual report is made available to shareholders each year in advance of the annual shareholder’s meeting, whereas the 10-K must be filed with SEC within 90 days of the company’s fiscal year-end.


Many companies have begun to produce a “hybrid” version of the annual report, which is a combination of the annual report components listed above and the 10-K. An example of this type of Annual Report is Procter & Gamble (PG).  Download the accompanying file for an overview of the key sections of this report.


An annual report is a document that provides the financial performance and operating activities of a company for a given fiscal year.  It is a report that is directed, first and foremost, to existing shareholders of the company.  It is a document that allows the company to disseminate information prior to a company’s annual shareholder meeting. Although an annual report is similar to a 10-K the style and format are very different, and typically, the annual report is an easier document to review and digest.