The annual report is a summary of financial data from the company’s activities for 1 year. What is a financial annual report, what are the components in it, and how do you create this report? Check out the full explanation on the swiftblogging blog .

Basically, every issuance of annual financial statements is used to see how the report of a company’s performance is and can be downloaded by the public from the official website of the company concerned.

Usually, this is used by large-scale companies because it is highlighted by many parties at once.

In the report written about the analysis of management’s current financial condition and where the company plans to take it in the future.

What is an Annual Financial Report?

The annual financial report, also known as the annual report, is a summary of financial data originating from the company’s activities for 1 year.

Usually, the report writes about the company’s activities throughout the year, from before to now, and plans for the future.

So here is also written a clear financial management analysis prepared at the end of the year by external users.

The goal is to be able to know the company’s financial data internally and how to plan financial management in the future.

So this report is made with the intention of providing information to users such as potential investors or shareholders about the company’s financial performance and operations.

Contents or Components of Compiling Annual Financial Statements

Actually, this annual data provides more information about the overall performance of the company in the previous year.

So this report is not in the traditional form of a large number of texts.

However, the report is written in the form of images and graphics in order to create a document that looks attractive and is easy to understand visually.

The following is a list of components/contents that make up the annual financial report, including:-

1. Welcome Letter From CEO

This greeting was made especially by the CEO for shareholders by providing concise information on the company’s performance data in the previous year.

That’s why the CEO always spends his time writing this letter to show the company’s achievements.

So the content is made more interesting so that shareholders are immediately captivated when reading information reports about the company’s performance.

2. Performance Report

The dedication of making annual financial reports generally focuses on several main achievements of the company, namely achievement goals, special initiatives, awards that have been received by employees/companies.

So the main purpose of making this component is so that shareholders are satisfied that they have invested in the company.

That way, shareholders can persuade other potential investors to do the same (invest in the company).

3. Financial Reports 

This component is the main key in the preparation of annual financial statements.

Because this section presents quantitative data to users about certain aspects of the company’s financial performance in the previous fiscal year.

Some of the things that are written in this section include balance sheets, cash flow statements, and income statements.

In addition, the contents of this report usually contain graphic descriptions and charts so that the information conveyed is easily understood by the reader.

4. Prospects/Plans For The Following Year

The contents of this report relate to information about the company’s performance in the future.

The goal is for shareholders to know about the company’s goals and future plans.

From here, investors can find out the current condition of the company as a whole and its future growth plans.

So this report will include information about the company’s strategy and its plans to apply that strategy in the coming year.

5. Report Format

Although the report is in hardcopy form, there are also a number of companies that present electronic annual financial reports on the company’s official website.

This electronic version is usually a PDF file for easy access by readers.

In addition, there are usually a number of companies that present their reports in an interactive online form.

The goal is for users to be able to read the report while expanding the graph more easily virtually.

Purpose of Making Annual Financial Report

Below are some of the objectives of preparing annual financial reports, including:-

1. Comply With Applicable Regulations

When running a business, the presence of this annual report is very important.

The report contains an audit review, addresses of directors, accounting policies, and finances (profit and loss, balance sheet, and cash flow).

The report also contains the company’s insights into its relationship with company management, investors, company functions, company activities, as well as financial information.

2. Provide Complete Information About The Company’s Finances

The purpose of making an annual report is to convey complete company financial information data.

However, too much data can make the reader confused.

The solution is to break the report data into graphs and charts.

Usually, companies hire a report designer so that they can represent their financial statements into a design element that looks visually appealing.

So all cash flow statements, balance sheets, income statements, and financial summaries are made systematically.

In addition, usually, some companies also include a savings fund contribution complete with stock options in it.

The purpose of making this annual financial report is so that readers can understand how the company works, how much income investors get, and how the company’s business grows.

3. As A Way To Communicate Business

This report was created to be a powerful business communication.

Because the goal is to be able to introduce the board of directors to shareholders and key company personnel.

That is why the report usually contains messages for moral improvement from the highest members of the company such as the chairman of the board of directors or CEO to employees.

In the message is written gratitude because they have worked well for the past 1 year.

This message was conveyed from the beginning of the preparation of the annual financial statements.

In addition, other objectives of preparing this annual financial report are:

  • Provide information about performance, financial position, and changes thereof,
  • Demonstrate management’s achievement of the resources that have been entrusted.
  • As a marketing tool in written form.
  • As a document containing the company’s performance and profit and loss for one year.
  • Important information for investors who will invest in the company in order to know the state of the company.
  • Provide an overview of the duties, roles, and work of each field in the company.

4. As A Promotion of Company Branding

In addition to submitting financial information data to shareholders, this annual financial report is also used as marketing media.

Therefore, it is usually written using a certain theme according to the trend so that readers are involved and follow the structure of the report systematically.

The stories conveyed are positive and encouraging things from employees and customers so that the reader’s sense of trust increases.

Because the report is used as a medium for telling stories so that the report looks prominent and visually attractive.

That is why today many companies use professional annual report design services in order to create amazing report designs.

5. As A Way To Publicize Company Achievements

This report contains information on the history, mission, and vision of the company.

In addition, a number of achievements that have been achieved from last year are also clearly stated.

The achievements of cooperation with major brands, increased research, market share gains, and the addition of new machines are also listed in this report.

Stages of Making Annual Financial Reports

Every company listed on the stock market is required to make an annual report.

Unfortunately, not all companies understand the correct manufacturing steps.

In short, the stages of making annual financial statements will go through these stages:

  • Compile all information regarding the company’s achievements that have been achieved.
  • Determine who will read this report, usually potential investors, financial analysts, employees, the government, to the mass media.
  • Determine the theme of the report and what important things will be in the annual report, including the main key to convey to the target public.
  • Classify reports into sections for easy understanding, such as financial summaries, letters to shareholders, company developments, company operations, financial statements, company directors, and information about employees.
  • Enter company leadership comments.

Then, after confirming the steps above, then you can pay attention to other stages such as:-

1. A Full Explanation Of The Company Profile And Creative Ideas

The initial stage of making this annual report starts with submitting a complete company profile with business goals and objectives.

In addition, creative ideas made by the company and other activity report data are also added.

2. Create New Designs, Looks, And Writing Techniques

The next stage is to pay attention to writing techniques that are made fresher and newer according to the content so that the purpose of making it is conveyed to the reader.

That’s why many companies use design experts to define the letters as well as display the numeric data, infographics, and tables.

If the company has a lot of activities and data, the way to display it in a report is to make an infographic.

However, if the activities are few, the contents of the annual report will be in the form of long writing.

3. Doing Copywriting, Translating, And Guaranteeing The Quality of Writing

Copywriting that is equipped with this translation includes the process of making related reports.

Starting from the data that is poured into writing so that the data is easy for consumers to read.

If the copywriting has been prepared, then do a check on the quality of the writing.

Is it feasible and there are no errors in conveying the information.

So the writing can be immediately changed before finally being printed into hard copy.

4. Make A Sample Report And Carry Out The Final Printing Process

Before printing, determine the design and color first.

Usually, the printed sample is called a dummy.

If the sample annual financial report is in accordance with the needs, then the next process is to do the final printing of the contents of the company’s annual report.

5. Guarantee The Quality of The Mold And The Delivery Process Runs Smoothly

The last stage is the molding process, which is to re-check the quality of the dummy by confirming it at the end of the print.

So when an error occurs in the printing process, the printer still wants to be responsible.

Furthermore, the delivery process is carried out at several locations at once.

So it takes time to package the annual financial statements so that they are not damaged.

Such are the stages of making an annual report that the company needs to pay attention to so that the results are perfect.

Difference Between Annual Report and Financial Report

The difference between the annual financial statements and the financial statements can be seen from the basic purpose of making the two reports.

Here are the differences between the two:-

The difference between the annual financial statements and the financial statements can be seen from the basic purpose of making the two reports.

Here are the differences between the two:

1. The basic purpose of making financial statements is to provide a report on writing clear terms and figures.

In addition, it also provides information about past performance and changes in the company’s financial condition that is needed by investors and shareholders.

This means that the report is easy to understand and transparent.

All assets, profits, liabilities, and expenses must be written completely and clearly in the financial statements.

2. The basic purpose of annual financial statements is to provide a broad overview of the company. 

So what is written is not just financial numbers like the financial statements above.

In this case, the annual report provides information about new markets, products, strategies, direction plans that will be carried out by the company in the future regardless of its financial condition data.

So that’s a little discussion about the meaning, content/components, objectives, stages of manufacture, and the difference between annual financial statements and financial statements.

Although both have different basic goals, both of them need financial data that can be accounted for in order to get factual data for future business planning.