Marketing Analytics and Reporting

How to write an annual report Warren Buffett would read [Video]

How to write an annual report Warren Buffett would read

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Want to save time on your next annual report? Learn how to use our Annual Reports (Part 3) toolset to create an annual report that covers important topics like your company’s value creation, team highlights, financial ratios, competitor analysis, full year timeline, strategic goals for next year and five-year financial projections, all of which you can download with the link in the description and customize to your needs.

Annual reports can be a powerful promotional tool for your company. They are a key marketing tool for investors, and often include illustrations, letters from a key chair or CEO, and always offer a financial overview. Because it is an outward external facing document, they also should be written as such. They often highlight achievements and goals for the future.

When investors read these documents, they are looking for an understanding of the company’s core business, customers and industry, its financial data like a balance sheet, cash flow, or past quarter performance, as well as any risk factors associated with the company like impending regulation, legal cases, too much customer concentration, or industry-wide considerations like supply chain problems.

So how should you start your annual report? First, introduce yourself and your business.

Begin with your core vision, mission, values and team, as well as any key achievements and milestones from this year. Once that’s all out of the way, you can focus on your core business, how it works, and how you create value.

Instead of a paragraph block of text, you can break down how you create value across multiple elements of your business.

Show the creation of value across multiple stages, and highlight additional details and key metrics that support your statements in a visualization similar to a KPI dashboard, but applied to your value creation.

Last, list the end result of the creation process as the value created. This list of created value should not just be company-centric, but value created for other stakeholders like customers, shareholders, or societal benefits from the customer.

Elsewhere in this toolset, you can highlight ESG related factors with its own slide. These could be value created through upskilling employees, hiring diverse employees with fair wages, or any sustainability endeavors you’ve undertaken.

After you’ve introduced your business, you may want to highlight a specific segment or team for exceptional performance.

A team of the year visualization helps draw investor attention to a specific team, more from a recognition standpoint than a reporting standpoint.

Execs can use this slide to highlight stand-out accomplishments from a specific segment of the business, which can then be used to help set benchmarks, encourage employee motivation, and showcase motivated employees to external stakeholders like shareholders.

Next up, the financials. No annual report is complete without an overview of finances. Even if they’re at a glance or a high level, you need to break down your financial data so internal and external stakeholders can assess your performance.

The most standard and comprehensive ways to report your financials is with a financial ratios report.

These are your company’s P/E Ratio, which is the ratio of a company’s share price to the company’s earnings per share; your return on assets, which is how profitable a company’s assets are in generating revenue; debt to equity, which is the relative proportion of shareholders’ equity and debt used to finance your company; return on equity, which is the profitability of a business in relation to the equity or assets minus liabilities; current ratio, which measures whether or not a firm has enough resources to meet its short-term obligations; and finally return on investment, which is the net profit and cost of investment that results from an investment of some resources.

In this visualization, you can use the box next to each category to input the relevant data.

Then address these numbers and how they compare to previous years by plugging them in on the right hand side. Then, adjust the bar graphs to reflect the year-over-year change.

This overview is indispensable to any annual report, as the one key determinant to a company’s level of success is its financials.

For more tools, click the link at the top of the description!

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