What is an Annual Report?

Definition: Reports created annually that provide an analysis and assessment of trends in the past year.

Annual Report usually consists of:

  • An explanation of accounting practices in the annual report, ie. a description of the principles for determining the accounting items in the income statement and balance sheet
  • Information on the events that have affected the company's accounting
  • Management's statement that the annual report gives a true picture of its economy and development
  • Possibly. auditor's report, if audited
  • Not all companies must prepare an annual report, it depends on the company's legal form and size.

Overview of your business economy

An annual report can help you understand the strengths and weaknesses of your business economy, since it provides a picture of corporate earnings.

Annual reports are also used to show the company’s financial situation to users such as creditors and other collaborators. You can also use your annual report to find out how your enterprise economy can be improved.

Credibility in your annual report

It is important to have a credible annual report, eg: when your collaborators will assess your ability to obtain credit and borrow money. The annual report does not indicate the tax considerations, they must instead be shown through tax accounting.