Major Parts of an Annual Report: An annual report contains basic financial statements - Balance Sheet, Statement of Profit and Loss and Cash Flow Statement. It also carries management’s discussion of corporate performance of the year under review for futuristic prospects.
Tools of Financial Analysis: Commonly used tools of financial analysis are: Comparative statements, Common size statement, trend analysis, ratio analysis, and cash flow analysis.
Comparative Statement: Comparative statement shows changes in all items of financial statements in absolute and percentage terms over a period of time for a firm or between two firms.
Common Size Statement: Common size statement expresses all items of a financial statement as a percentage of some common base such as revenue from operations for statement of profit and loss and total assets for balance sheet.