Annual report
Fundamental analysisA company’s yearly disclosure containing the financial statements, notes and auditor’s report.
In plain terms
Read the auditor’s report and cash flow first, the chairman’s letter last.
1492 terms
Glossary
Every term is defined twice: once the way a filing would put it, and once the way somebody would explain it to you across a table. The second one is usually the one that sticks.
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MD&A
Fundamental analysisAlso called: Management Discussion and Analysis
Management Discussion and Analysis — the statutory narrative section of an annual report in which management explains the year's performance.
In plain terms
Read it for what it avoids. If margins fell and the section discusses industry tailwinds without ever naming margins, the omission is the information.
Auditor’s report
AccountingThe document accompanying the financial statements in which the auditors set out their opinion, the basis for it, and the Key Audit Matters.
In plain terms
The one section of an annual report not written by the company. Read it before the chairman's letter, and note that a single word carries the verdict — unmodified.
Contract specification
DerivativesAlso called: Contract specifications
The exchange document defining a derivative contract — lot size, quotation unit, tick size, expiry, settlement basis, and for a deliverable commodity the grade and delivery centre.
In plain terms
For a commodity this is the nearest thing to reading an annual report. It tells you what would actually be delivered, where, and in what quantity, which is what the price is a price of.
Debenture trustee
Market basicsThe entity appointed to act for the holders of listed debentures, to whom periodic filings on security cover and covenant compliance are made.
In plain terms
Debenture holders never negotiate individually; the trustee holds the security and enforces the terms. Its filings with the exchange say things about a borrower that the annual report does not.
Foreign currency translation reserve
AccountingAlso called: FCTR
The reserve accumulating exchange differences arising on translation of an overseas subsidiary’s accounts into the reporting currency.
In plain terms
It can build quietly across six years of annual reports and is only properly visible in the statement of changes in equity. It reaches the profit line exactly once — when that operation is disposed of, which may be never.
Key person risk
Risk & psychologyDependence on one individual whose departure would materially damage the business.
In plain terms
The restaurant that is really a cook. It is a disclosed risk factor in Indian annual reports and almost nobody reads that far.