How read balance sheet in four step

IN THIS ARTICLE

 I AM WRITING THE IMPORTANT THING TO READ IN THE ANNUAL REPORT AND THE 4 STEPS WHICH WILL HELP YOU UNDERSTAND THE COMPANY FUNDAMENTALS AND  GROWTH IN THE FUTURE.

IMPORTANT THINGS ON THE ANNUAL REPORT 

1. CORPORATE INFORMATION
2. MANAGEMENT COMMUNICATION
3. STATUTORY REPORTS 
4. FINANCIAL STATEMENT

     1. CORPORATE INFORMATION

• COMPANY HISTORY
• VISION AND MISSION
• COMPANY GEOGRAPHICAL PRESENCE AND EXPANSION STRATEGY
• CORPORATE SOCIAL RESPONSIBILITY
• MAJOR PRODUCT CATEGORIES AND PROFIT SHARE
• KEY PERFORMANCE INDICATOR

      2. MANAGEMENT COMMUNICATION

• MESSAGE FROM CHAIRMAN
• BOARD OF DIRECTOR

THEY ARE THE IMPORTANT STRATEGY  MAKER OF A COMPANY. AND ALSO LEAD THE COMPANY

WHAT EVERYBODY LOOKS IN THE BOARD OF DIRECTOR

• 8-10 BOARD MEMBER
• 50% EXECUTIVE AND 50% NON EXECUTIVE DIRECTOR WHICH SHOULD BE A BALANCE FOR A GOOD COMPANY 
• THE MAJORITY OF INDEPENDENT DIRECTOR MUST BE A EXPERIENCED BUSINESS LEADER WHO HAS NO DIRECT CONNECTION TO A COMPANY.
• SEPARATE CHAIRMAN OF BOARD & MD /CEO ROLES

MANAGEMENT DISCUSSION AND ANALYSIS 

• EXECUTIVE SUMMARY
• MOST READABLE SECTION OF THE ANNUAL REPORT
• IT HAS SPECIAL INTERESTING THINGS IN IT.

          3. STATUTORY REPORTS 

• It is the submission of financial and non-financial information 

IMPORTANT THING IN STATUTORY REPORTS

• Director report

• corporate governance reports

IMPORTANT  THING IN CORPORATE GOVERNANCE

• Owner of a share in the company 
• Conflict of interest possibility
• Skill and  competency                                                                       
• Statutory Committee
• INDEPENDENT AUDITOR'S reports 
• Related party transaction 

• IMPORTANT THING TO READ IN Statutory Committee 

1. AUDIT COMMITTEE
2. NOMINATION AND REMUNERATION COMMITTEE 

   
   

AUDIT COMMITTEE

1. Financial Reporting Process 
2. Accurate Financial Statement
3. Raise Red Flags     
4. ONLY NON-EXECUTIVE AND INDEPENDENT DIRECTOR             

NOMINATION AND REMUNERATION COMMITTEE 

• DIRECTORSHIP AND SENIOR MANAGEMENT HIRING POLICY
• RULES OF COMPENSATION

       4. FINANCIAL STATEMENTS

• BALANCE SHEET
• PROFIT AND LOSS STATEMENT
• CASH FLOW STATEMENT
• NOTES TO FINANCIAL STATEMENT

4 STEPS TO FIND THE BEST OUT OF THE ANNUAL REPORT

STEP 1: DOWNLOAD THE ANNUAL REPORT AND HIGHLIGHT YOUR IMPORTANT PART 

STEP 2: 60-MINUTE READING TIME 

I READ 15 OF MINUTE TOP 3 OF THAT COMPANY AND READ THE FINANCIAL STATEMENT  FOR 45 MINUTES BECAUSE MATH CAN CATCH THE REAL FACT.

STEP 3: FILL UP THE SHEET WITH THE ANSWER 

STEP 4: ANALYSIS  AND USE COMMON SENSE

USE THIS FRAMEWORK FOR AT LEAST FOR  TWO COMPANIES AS A TASK TO REMEMBER.

THANK YOU SO MUCH.