Tips to decipher reports

THE Australian Securities and Investments Commiss-ion’s website lists the following tips for reading an annual report of a high tech company.

*l Are the activities reported the same as what the company said it was going to do either in its prospectus or last report?

* Is business strategy the same as that described in the prospectus or last annual report? If it has changed, how will it affect performance?

* How did acquisitions add value to the company?

* Has a tangible result been achieved from research and development activities?

* Did the company receive revenue from its business activities? If it didn’t, did the directors explain why not?

* Did the company make a profit or loss? Did the directors explain the loss?

* How did the company fund its activities? Did it generate cash flow from its business activities or rely on funds from shareholders, debt financing and asset sales?

* Is the company going to change its activities or strategy for next year?

* Is the company going to make a profit next year? How?

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