What is a company’s Annual Report?

An Annual Report is a document produced by all companies with shareholders. The report details how the company is run (its operations) and it’s financial health. It will also normally contain considerable information detailing what has happened in the company over the last year.

Typically, an annual report will contain the following sections:

  • General corporate information
  • Operating and financial highlights
  • Letter to the shareholders from the CEO
  • Management’s discussion and analysis (MD&A)
  • Summary of financial data
  • Financial statements, including the balance sheet, income statement, and cash flow statement
  • Comments on the financial statements
  • Auditor’s report
  • Accounting policies

From this information, we are able to create features that model a companies fundamental value, or by looking at changes between reports, might be able to predict swings based on differences between the expected and reported values.

In the US the structure and contents of annual reports are standardised into at 10-k report. This makes it easy to quickly find the information you’re looking for if you’re an analyst. Similarly, it makes it easier to automatically extract this information if you’re writing a program to do so. Unfortunately for us, annual reports from companies outside the US are not subject to such restrictions and thus can vary remarkably.

On top of these issues, documents are normally very long. The pdf shown below is about half of facebook’s 2018 annual report. 

Because of this, it is actually incredibly time-consuming to read through these reports. For example, if you wanted to see how a company has changed over time, or to see differences between companies in a sector, you might have 1000s of pages of reading!

How do you find a company’s Annual Report?

In America, annual reports are all centralised on the SEC website. In the rest of the world, they are instead found on companies websites. The easiest way to find a company report is, as you might expect to use google.

However, for some stocks, this approach doesn’t work. In these cases, we need to look for the company’s investor relations section. This is the part of the company’s website that is dedicated to giving information to shareholders, investors and other interested parties.

Downloading and preparing reports

In the capstone project, you will have to download two reports from each of your 5 assigned companies.

The process is really easy and each report should be downloaded in pdf form, ready to be converted into text. (We showed you a couple ways of doing this earlier in the course)

Generally speaking, it is good practice to save your reports in a clear format so that you can quickly identify ones you need. It’s not too difficult for 10 reports, but imagine you were working with 10,000! The format we work with and recommend is Comany_Name_Year. Easy.

You should now be ready to start on the capstone project! Please head over to Problem Two to begin.


I'm the community lead at Auquan. Feel free to message me if you get into any problems. A fun fact about me is I actually studied medicine at university.


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