6.25What is annual financial performance?
1What is it?
The annual report summarises the full year: audited financial statements, management discussion, risks, and the auditor’s report.
2Why does it exist?
It is the most complete and reliable picture, because it’s audited. Long-term investors read it.
3Practical use
In an annual report, read: Chairman’s letter, Management Discussion & Analysis, the three statements, notes on debt and related-party transactions, and the auditor’s report (look for any "qualification").
4Quick revision
- Annual reports are audited.
- Read MD&A, statements, notes, auditor’s report.
5Knowledge check
Q1. Why is the annual report more reliable than a quarterly update?Show answer
It is fully audited.
Q2. What does MD&A stand for?Show answer
Management Discussion and Analysis.
Q3. What is an audit qualification?Show answer
The auditor flagging problems or disagreements, a red flag.