How to Compile an Annual Report

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Being handed the task of compiling and writing an annual report can be overwhelming. An annual report presents the financial data and information for a business over the span of a year. The report's content must be honest, as accurate data are expected by the shareholders and investors, who need to understand the business’s finances. If you are responsible for compiling an annual report, start by gathering all of the financial information pertaining to the business that falls within the chosen financial period. Do not use any information that does not apply.

Categorize the information you have been given by the accountant or the owner of the business. Place all of the assets data into one pile. Assets are the things that the company owns. Examples include cash, office supplies, inventories and accounts receivables. Put all of the liabilities in another pile. Examples of liabilities include bank loans, creditor notes and unpaid taxes.

Place all of the expenses into a third pile. Expenses are items that are paid or spent on a monthly basis, such as utilities, rent and business strategy payments like marketing campaigns and business cards. The expenses may fluctuate each month. Lastly, put all of the earnings information into a fourth pile. Earnings often include the sales made during the given period.

Check the dates on the assets, liabilities, expenses and earnings to ensure all of it falls into the chosen period. For example, if the chosen period is January 2006 to December 2006, do not include financial information that is dated in 2005 or 2007.

Create graphs for each of the categories, so it is divided by month. For example, create a graph that shows the assets owned in January, December and all of the months in between. Under the paragraph, explain any major changes in the assets. Repeat this step with the liabilities, expenses and earnings.

Add up the total annual liabilities sum and the assets sum. Subtract the liabilities amount from the assets. The result of this calculation is the net worth. This will reveal whether the business owes more than it owns and, hence, disclose the business’s financial standing.

Locate the expenses and the earnings graphs. For each month, subtract the expenses from the earnings. This will reveal whether the business spends more each month than it earns. Add up all the expenses and all the earnings for the entire year and subtract the expenses from the earnings. This will reveal whether the business has spent more during the year than it has earned. This information is important to investors and shareholders. For example, if the business owes more than it owns and spends more each month than it earns, investors may not want to put money in the business.

Write a concluding section that discusses the major points in the annual report. For example, mention that expenses are twice as high as earnings, if this is the case. Offer solutions to spending by suggesting the elimination of specific expenses or increasing sales in the next annual period.

Ask your CEO to write an introductory letter to the annual report. The CEO or business owner will address the readers directly and discuss any important factors in the report. The letter often focuses on the company's positive achievements while briefly mentioning the negatives. The letter is inserted as an introduction to the report.

References

About the Author

Based in Toronto, Mary Jane has been writing for online magazines and databases since 2002. Her articles have appeared on the Simon & Schuster website and she received an editor's choice award in 2009. She holds a Master of Arts in psychology of language use from the University of Copenhagen in Denmark.

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