What to read in an annual report
Hi guys,
Since some public companies have rather lengthy annual reports (Deutsche Bank has e.g. over 600 pages), I was wondering what sections you usually focus on in an annual report, to get a good overall understanding of a company?
Really depends what industry you're in. Unless you're auditing the company or working in an ER coverage group that covers a select number of companies, I'm pretty sure nobody reads the whole report. Maybe research analysts at a true value shop that spend years doing due diligence on companies. Aside from that, it's not worth the time. Could be worth reading a shorter one if you simply want to get familiar with financial statements. Definitely don't read a 600 pager. Stick to something in the 100 page range.
In my industry for example, the actual financials are not that important (BS/IS/CF), but certain items only released annually are. Some things I look for but this really depends on the person would be the analysis of a company's dividends, and maybe parts of the MD&A section. Shareholder taxation information as well might be useful.
Thanks blackjack!
So besides MD&A and the financials, what other annually published items do you look at?
And how much time do you give yourself usually, if you want to get an overview of a company which you've never looked at before, by reading public reports?
None of this sounds accurate to me. Everyone I know reads the 10-k of every company they research. Aside from banks, most Ks are only 100-200 pages of reading. If you can't get through it in 1-4 hours, you have no business being in this business.
And by "business" I mean investing based on fundamentals, not trading on technical analysis or whatever else those guys use.
Similar thoughts. At the research intensive funds it's quite normal to read almost all bits of the annual report. ARs are full of gems that help you really understand the business in question.
1-4 hours is a huge range though... what time frame would be a solid one per 100 pages would you say?
I mentioned those covering companies or looking into companies as investments should read it. Without going into too much detail, my fund isn't doing core research directly into individual companies. Therefore the annual reports only serve certain purposes.
OK interesting, seems there is no way around doing the heavy stuff...
What to glean from an Annual Report before interview for analyst position? (Originally Posted: 09/25/2017)
It was suggested to me I should review the Annual Report for the largest player in the sector for which I am interviewing for an analyst position prior to the interview. My background is not in finance. I have some idea of the language. (I also started an accounting crash course for wall street online but didn't finish)
Can you tell me some highlights I should look for? How do you suggest I work it in? Edit: Found the Operating Results page (P&L data)...
Incidentally, I think the first interview is just to gauge my soft skills. The interviewer just graduated last year and her background is not in finance--unless of course she has some very targeted questions she asks of all candidates to eliminate them.
Full disclosure: the sector is healthcare.
Your interviewer will know more than you give them credit for. Unless of course, somehow you have live deal experience and inside knowledge of their deal flow without working there.
Know the executive summary, the key drivers of their net profit, and the key measures of their profitability.
Basically you need to: Get 10-k. Ctrl+F Item 1. Read that. Ctrl+F Item 7. Read that too.
Accounting for equity investing / reading an annual report (Originally Posted: 12/08/2016)
Hey, can anyone recommend books and or online classes for accounting when it comes to stock picking? In other words what are key items and potential red flags to look after when reading an annual report. Do appreciate every bit of help and hints on resources.
Thanks
Not a book, but BlackHat's guide to reading a 10-K is pretty good: http://www.wallstreetoasis.com/forums/anatomy-of-the-10-k
thanks - anyone else? Any lecture / book recommendations?
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