Read The Annual Reports To Be A Better Investor


 

The greatest investor of all time, Warren Buffet had said that he reads annual reports all the time. And I  think it pays to heed his advice. After all, you can learn more about business and investing from those reports than you can in most business-school classrooms. Even if you work through a report and decide that the business isn’t for you, you will definitely gain a better understanding of the business as well as the industry.

First up, read the annual report to find out about the business model of the company and how it is making money. You can’t possibly go any further in your research without knowing what the company does! Next up, read and study the financial statements as well as the footnotes in the annual reports. There are basically 3 important financial statements you have to take note.

  1. Balance Sheet 
  2. Income Statement
  3. Cash Flow Statement

 

Last but not least, read up on the Business risks portion. These risk factors should disclose some things about the business and help you assess it better.

Have fun reading all your annual reports and remember even Warren Buffet read IBM annual reports for over 50 years before finally investing in the company. Opportunity indeed comes to the prepared mind.

Refer to this link to get An Investor’s Guide To Reading Annual Reports by SGX. Below is an educational video by SGX on “Reading Annual Reports”.

 

 

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