Reading annual reports?

[Steve_1982]

The first paper annual report I have reached me a few days ago. It is from the company Supreme Industries (I had been holding shares of Dabur for a while but their annual report never reached me.)

I started reading some of it and got past the section about voting in directors. After a while I decided to read the annual report backwards because some accountants say the worst parts are hidden at the back of reports. There was nothing hidden at the back except the accounting information.

What are the most important parts of an annual report to read? Any tips on how to know when a company is about to get into trouble??? Any examples of an annual report where the company just got into trouble or got out of trouble or is very promising?

 

[Einstein]

I think there are many factories which determine such, but always think of something forward in future for upto 5 years. for example,

1. if company sales are flat and it is performing good, pricing going uplike in current scenario, and if the company does not have any moat with it you have to be carefull of that.

I was recently reading a book by john brooks on xerox company, it became top business in USA in just few years. im sharing some figures here.
in 1961, they were 66 million, in 1963 176 million, 1966 over 500million$ worth sales of their xerox copier. In 1966 it ranked about 63 in whole USA in net profits, 9th in ratio of profit to sales, and fifteeth in terms of market value of its stocks.
If you have bought this company in 1959 till 1967 you would have made 66 times, if you have told it since its inception 1955, 190 ******* times. but company didn't had any moat with it, and later on their sales went down by 75%. In 1966 stock was trading at 267$ per share. and in few weeks, it dipped to 131$, xerox later lost its presense in the market and same thing happend with eastman kodak, which buffett once described(giving example of moat) in his speech to Columbia university.

seconly, the most important reason why a company goes broke is debt, I love to give example to kids, that you'll never go broke if you never get into debt, but they always use credit cards. don't need to tell you more on this, we have dozens of examples like bhushan, suzlong, unitech etc. etc.

 

[romy]

I am also keen to know more about how to read annual report between the line.

 

[romy]

To get some insight

 

[romy]

Can anybody throw some light on how to decifer about share holding pattern

 

[romy]

What it indicates

 

[aryan.]

If insiders are buying then its a good sign.

 

[romy]

What meaning should be taken to insider

 

[aryan.]

Insiders like the CEO buying huge stock should be taken as a good sign. They are buying because they think that the stock is undervalued.

Naveen Jindal of Jindal steel regularly buys huge amount of stock when the share price is very low.

So if you see insider buying you should ask youself the question why is the insider buying. Then you study the company and if you think the company is undervalued, you should also buy.

 

[romy]

i agree with you , i shall apply it for analyzing a few companies and shall see affect.