Components of Annual report

The chairman's report and the chief executive officer's report

These reports are often ignored as vital sources of information, yet provide important indicators of opportunities, problems and the intentions of management for the following year.

The auditors' report

The auditors' report is a summary of the findings of an independent company of accountants (auditors). The auditors perform procedures to obtain evidence regarding the figures and disclosures in the reports; and carry out tests on the internal controls to ensure that transactions are properly recorded. The auditors also give an opinion on whether the accounts have been prepared in accordance with international financial reporting standards and in the manner required by the Companies Act of South Africa.

Income Statement report

In this case, you have adequate money available and no matter what happens to interest rates, you opt to pay a specific additional amount every month. An Income Statement is a summary of a company's income and expenses for a specific period and reports the company's final profit or loss for that period - usually 6 months or a year (its heading will specify this). The comparable period for the previous year will also be reflected, so you should be able to see at a glance whether profits are increasing or decreasing.

Balance Sheet basics

Some of the entries in the income statement and balance sheet do not involve actual cash inflow and outflow of funds; for example depreciation. Although depreciation reduces the profit of the company, no money is actually spent.

Cash Flow Statement basics

The purpose of the cash flow is to disclose information about the events that affected cash flow during the period, just as the name suggests.