How To Read An Annual Report

In today’s challenging business environment, the individual investor must be able to quickly and cogently glean data from an Annual Report.  To aid in this endeavor, here are some common phrases and their translations:

“Our expense indicators were sub-optimum.”

Translation: We’re spending like drunk monkeys.

“Our cash flow continues to be a marvel of the industry.”

Translation: They can’t believe we stay in business.

“Profit improvement—though continuing a slightly negative trend—appears to be just over the horizon.”

Translation: We’re still losing money.

“Our management team has a strong vision of the future and is prepared to implement it.”

Translation: We plan to hold on to our phony baloney jobs until we can cash in our stock options.

“Extensive redeployment efforts and implementation of TQM values continue.”

Translation: Everyone else is doing it so we are, too.

“Our people are our most important asset.” 

Translation: If we thought we could get away with it, we’d lay off the whole bunch and replace them with robots.

“Last year’s results were less than advantageous.”

Translation: We stunk.

“Management believes that next year will see the fruits of our combined efforts.”

Translation: If things don’t get better soon, we’ll all be working at Wendy’s.

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