Contents of Microsoft 2017 Annual Report
In their annual report, the authors from Microsoft (2017) provide a vast amount of information pertaining to their company’s activity in the fiscal year of 2017. The contents of their annual report are as follows:
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- An opening letter from Satya Nadella, Microsoft’s chief executive officer, to the company’s shareholders, partners, clients, and workers. The letter provides summarized information about the company’s activity and performance throughout fiscal 2017 in general, such as a brief description of the business’ financial situation, their largest customers and most important projects, activities such as charity, as well as the corporation’s plans for the future (Microsoft, 2017).
- We selected financial data. This section contains the most important financial information about the company’s activities, such as total revenues, gross margins, operating income, and net income, diluted earnings per share, cash dividends per share, investments, total assets, obligations, and stockholders’ equity (Microsoft, 2017).
- Financial review. This part of the report contains several sections providing a variety of financial information. For instance, the data about quarterly stock prices, the repurchases of stocks and dividends, and the performance of stocks are included (Microsoft, 2017).
- Business. The section labeled “Business” is comprised of a vast amount of information about the business activities of Microsoft related to activities that were carried out and to the future plans of the company, such as the projections, assessments, objectives, and expected operating results, or forward-looking statements (Microsoft, 2017). The authors provide a general overview of the business, its vision, goals, and products and describe the products that are expected to be created in the future (Microsoft, 2017). They also elaborate what operating segments Microsoft consists of; what competition it faces; what operations it runs; what Research and Development activities it undertakes; how it organizes its sales and marketing activities; what type of licensing it provides; who its customers and employees are; and where further information about the company can be found (Microsoft, 2017).
- Discussion & analysis. This section analyzes and discusses the financial condition of the Microsoft Corporation with the purpose of elucidating in detail the outcomes of the operations carried out by the company, as well as the financial performance and the condition of the business (Microsoft, 2017). After providing brief general information about the business, the authors make some statements about the financial condition of the organization, the outcomes of its operations, the expenses, the revenues, and so on (Microsoft, 2017). Therefore, a succinct overview of the company’s activity and financial situation is supplied.
- Quantitative and qualitative disclosures about market risk. This section is comprised of a discussion of potential risks that may become a barrier to the realization of the plans and expectations of the company, for instance, of those which were focused upon in the forward-looking statements in the “Business” section of the report (Microsoft, 2017). The section provides a qualitative description of the potential risks and barriers and then a quantitative assessment of their potential impacts (Microsoft, 2017).
- Income statements. This section consists of financial data pertaining to the incomes of the Microsoft Corporation in fiscal 2017. It includes such information as the company’s revenues, cost of revenues, operating income, net income, earnings per share, and so on (Microsoft, 2017).
- Comprehensive income statements. This section comprises a succinct description of the corporation’s incomes. It includes net incomes, other comprehensive incomes, net unrealized gains/losses on derivatives and investments, translation adjustments; the comprehensive income figure summarizes the section (Microsoft, 2017).
- Balance sheets. This section describes the balances of Microsoft, that is, the assets it owns and the liabilities it has; the total liabilities and stockholders’ equity figure summarizes the section (Microsoft, 2017).
- Cash flows statements. This section is comprised of data pertaining to cash flows of the enterprise, such as the net cash obtained from operations, financing, the net cash utilized in investing, etc. (Microsoft, 2017).
- Stockholders’ equity statements. This section contains data about stockholders’ equity. The total stockholders’ equity is provided, and its components are shown (Microsoft, 2017).
- Notes. This large section consists of notes and comments to each of the previous sections supplied earlier in the annual report in question. The notes provide additional explanations of certain aspects of the issues that were discussed above, as well as offer the information about the financial data given in the report as required by the generally accepted accounting principles in the U.S. (U.S. GAAP). The section contains both qualitative and quantitative information, as necessary (Microsoft, 2017).
- Auditor’s report. This section contains the report of auditors, Deloitte & Touche LLP. The auditors assert that the financial statements of Microsoft adequately and fairly describe the financial position of Microsoft and its subsidiaries, according to the U.S. GAAP (Microsoft, 2017).
- Controls & procedures. This section is another statement by the company’s auditors, Deloitte & Touche LLP, asserting that the disclosure controls and procedures used in Microsoft are effective and that financial reporting and its internal control in the company is adequate (Microsoft, 2017).
- Directors & officers. This section simply lists all the directors and the top executive officers of the Microsoft Corporation (Microsoft, 2017).
- Investor relations. This section provides some contacts of the company’s investor relations, supplies some details about the organization’s annual meeting of shareholders, lists its registered services for stockholders, and offers a brief statement about Microsoft’s corporate social responsibility (Microsoft, 2017).
The section about investor relations and corporate social responsibility concludes the 2017 Annual Report of Microsoft (2017).
The Information Required in an Annual Corporate Report, and the Purpose of Annual Corporate Reports
Generally speaking, corporate annual reports are financial statements that cover some pivotal data describing a company’s financial activities over a fiscal year and that are provided to the shareholders of the corporation (“Annual Reports,” n.d.). These reports describe the current state of a company (U.S. Securities and Exchange Commission [SEC], 2014). There are several forms for an annual report that may have to be completed by a company, depending on certain circumstances (Yuille, n.d.); for instance, domestic companies fill in the Form 10-K of the report (U.S. Securities and Exchange Commission [SEC], 2009).
It is stated that an annual report commonly includes such elements as an opening letter from the CEO of an organization, some financial data, the outcomes of the company’s operations, the information about the business’ market segment, the plans for the new future products, the activities of the firm’s subsidiaries, and, finally, the research and development efforts that are planned for the future (SEC, 2014).
More specifically, it is stressed that the most basic annual report should include the following items:
- a description of the industry in which the company operates, on the whole;
- audited statements about the company’s financial position, incomes, and cash flows, as well as the notes to these statements;
- the management’s discussion and analysis of the financial condition that the organization is currently in, as well as of the outcomes reported in the preceding two years;
- a succinct description of the business and operations of the organization over the last year;
- information describing the different business segments that the company has;
- a list of the enterprise’s directors and top executive officers; and, finally,
- the market price of the stocks of the business, and of the dividends that were paid (“Annual Reports,” n.d.).
Some companies also include a statement about their corporate social responsibility (Chan, Watson, & Woodliff, 2014). It is stressed that to meet these requirements, it is often sufficient to produce a document of several pages; however, large companies often utilize an annual report as a marketing tool, demonstrating their view on the current situation and the perspectives of the company, and write much longer reports (“Annual Reports,” n.d.).
It should be noted that public companies in the United States are required to create and publish corporate annual reports by the U.S. Securities and Exchange Commission (“Annual Reports,” n.d.; SEC, 2014). This requirement exists because it ensures that these companies provide relevant and true financial information to their stockholders, both current and potential, and maintain an adequate level of transparency to avoid machinations. Clearly, even though the information from annual reports can be used by competitors, the company can utilize the annual report to its advantage – e.g., to promote itself to any interested parties (“Annual Reports,” n.d.). This should also be an effective type of promotion due to the high level of trustworthiness of the audited statements provided in annual reports.
Annual reports. (n.d.). Web.
Chan, M. C., Watson, J., & Woodliff, D. (2014). Corporate governance quality and CSR disclosures. Journal of Business Ethics, 125(1), 59-73.
Microsoft. (2017). Microsoft 2017 annual report. Web.
U.S. Securities and Exchange Commission. (2009). Form 10-K. Web.
U.S. Securities and Exchange Commission. (2014). Annual report. Web.
Yuille, B. (n.d.). SEC filings: Forms you need to know. Web.