We recommend reading this chapter on Varsity to learn more and understand the concepts in-depth.
Key takeaways from this chapter
- The Annual Report (AR) of a company is an official communication from the company to its investors and other stakeholders.
- The AR is the best source to get information about the company; hence AR should be the default choice for the investor to source company-related information.
- The AR contains many sections, with each section highlighting a certain aspect of the business.
- The AR is also the best source to get information related to the qualitative aspects of the company.
- The management discussion and analysis is one of the most important sections in the AR. It has the management’s perspective on the country’s overall economy, their outlook on the industry they operate in for the year gone by (what went right and what went wrong), and what they foresee for the year ahead.
- The AR contains three financial statements – Profit & Loss Statement, Balance Sheet, and Cash Flow statement.
- The standalone statement contains the financial numbers of only the company into consideration. However, the consolidated numbers contain the company and its subsidiaries financial numbers.
Thank you for the reply. I am more concerned with how correct are the basic values that the companies claim in the AR, eg. the operating revenues from selling their products to customers, taxes, admin expenses etc. These numbers we can not verify and check and need to trust them.
I read that in the US, companies are insisted to submit 8-K and 10-K apart from the AR, and SEC are rigorously verify the numbers. Do we have the same process? Ultimately, I wish to know what is the risk if we assume the company is audited and reported correctly in the AR?
There are enough checks and balances in place. From external auditors to MCA to exchanges. Plus the constant public scrutiny – https://www.nseindia.com/companies-listing/xbrl-information
What is the assurance that the AR is legitimate and not manipulated by the company? Does SEBI cross-verify or investigate the auditors who audited the financial sheets?
They have the right to. But the assumption is that the AR is true to facts. Hence the reason for you as an investor to cross check and verify.
The lectures are very interesting and informative.
Glad you liked it, happy learning 🙂
EQUITY AND LIABILITIES
Equity
(a) Equity share capital – 301
(b) Other equity – 63,200
Total equity – 63,501
Non-current liabilities
(a) Financial liabilities
(i) Borrowings – 41,176
(ia) Lease liabilities – 1,767
(ii) Derivative liabilities – 7
(iii) Other financial liabilities – 1,035
(b) Provisions – 1,292
(c) Deferred tax liabilities (net)- 6,935
(d) Other non-current liabilities – 1,023
Total non-current liabilities – 53,235
In above example what would be Debt to Equity Ratio ?
Debt Equity Ratio = Borrowings/Total Equity.
You people have done splendid job. How beautifully structured the Topic even totally unaware of abc of stock can also understand the way you are making it comfortable. I have just started journey and Thankful that I\’m in Right school of training to get started. Thankyou TEAM.
Wishing you the best, Namrata. Happy learning 🙂
its useful sir
Happy learning, Sujit!
कृपया विडिओ हिंदी मे भी बनाव। Plz plz plz make video in Hindi also. Thanks in advance.
Sir
I am a new investor and opened zerodha account recently. How to invest in sbi small cap Or parag parik flexicap funds through coin app of zerodha. Pl mail me.
Thank you for video on balance sheet reading.
Susheela, as far as I know, PPFF fund is closed for new investment. For the other funds, please search for it in coin app and click on buy. Maybe you can call the customer desk to help you with the exact steps.
Thank you sir for such a short video with clear information.
Happy learning, Varsha!
HELLO Karthik Sir, on the last of video KEYNOTES, KEY TAKEAWAYS GET HIDDEN FROM ICON OF ZERODHA VARSITY. KINDLY ADJUST THE ZERODHA VARSITY ICON IN ANY CORNER SO THAT KEY NOTES WILL BE VISIBLE. Thanks You for your informative video
Noted, we are working on this Kundan.
Sir, I am starting to learn about stock market. Right now I want to restrict myself to investing only, that too on equities only. So, which modules should I read from the Varsity for this purpose??
All you need is the fundamental analysis module along with the basics to get started.
Thanks sir
Good luck!