Annual Report Analysis Example, Financial Statement Analysis

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• published: 24 Jan 2014
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For details, visit: http://www.financewalk.com Annual Report Analysis Example, Financial Statement Analysis Financial statements analysis is divided in the following areas in this module : • Income Statement • Balance Sheet • Footnotes • Cash Flow Analysis • Director's report • Management Discussion and Analysis • Auditor's Report • Shareholding Pattern Reading the annual reports of the company gives the basic information about the company and the industry in which it operates. Reading this chapter would enable you to understand • Components of financial statements • How to use financial information • Importance of financial statements for security analysis Income Statement Components • Sales • Other Income  Profit from the sale of assets  Dividends ( from investments, in the shares of the other companies)  Rent (Lease rental earned from commercial buildings)  Interest( Interest received on deposits made and loans given to corporate bodies and others.) • Materials Cost ( Opening stock + Purchases made during the year - Closing stock) • Employment Costs -- ( Salaries + Wages + Bonus + Gratuity + Contribution to PF + Welfare Exps. ) • Operating and Other Expenses -- Costs incurred in running a company a) Selling Exps -- Advertising ,Sales promotion, commission paid to salesmen, cash discounts b) Administration Exps -- Rent of offices and factories,municipal taxes, insurance, repairs, printing and stationery, telephone, legal, electricity costs, other exps to administer a company c) Others -- Loss made on the sale of fixed assets, Donations made by the company