My husband and I eventually plan to pick and invest in stocks ourselves; however, we are finding it difficult to learn how to read and analyze corporate annual reports. College classes can be expensive. Do you have any more affordable recommendations?
–M. Roberts, Ridgewood, NY
Kudos for recognizing the need to do your homework before you jump into the market. Many investors read business headlines but don’t bother to examine annual reports: publicly available documents that may give investors greater insight into the potential soundness of their investment.
At your local bookstore or library, you’re bound to find several accounting titles geared toward different audi ences. One written for beginners is Annual Reports 101 by Michael C. Thomsett (AMACOM; $19.95).
Also, when you’re ready to investigate an individual stock, be sure to fully explore the investor relations section of the company’s Website. Often there’s additional content that can help you put all the information in context. For instance, the IBM Website offers a Guide to Annual Reports at www.ibm.com/investor/tools/ annualreports.phtml.
But in the end, it’s not just investors who may want to read annual reports. How a company presents itself, and the priorities it places on certain values within its annual report, can give job candidates vital information to help them understand the corporate culture they may be joining.