An annual report is a comprehensive report on a company’s activities throughout the preceding year. Annual reports are intended to give shareholders and other interested people information about the company’s activities and financial performance. States may require an annual report documenting the management of the company or corporation for compliance.
Non profits will produce an annual report to show potential donors that they are being good stewards of their money. Most business reports look at smaller time periods. Digital marketers like rolling-28 day windows to remove weekends, accountants like months and quarters because they are discrete and bills are often monthly, and investors like annual information.
Much of business is cyclical, even when you don’t think that it is. While retail and Christmas shopping is the most obvious cyclical business, smaller niches can be more or less cyclical. A summer camp derives all of its income in the summer; if you did a trailing 3 month report in September, and projected it out a year, you’d be wildly off base.
By looking at financials annually, you remove seasonality, allowing the ebbs and flows of the annual calendar to balance each other out. Accountants tend to focus on discrete calendar years, but you can often get constantly good results by using a rolling 12 month cycle, which allows you to look at a year of data without waiting until the end of the year. By having a year’s worth of information readily available, you know that the decisions you are making are not impacted by the time of the year, but you avoid waiting until year end for the annual report.
