Researching Companies

This page discusses the effective ways of analyzing a company and its components. These positive or negative elements of a company can be the deciding factors in your crucial decision to pursue a certain company or set of companies for possible future employment.

How to Use Annual Reports in Researching a Company

A good, fast, cost-effective way to find out what a company does, and whether or not the company is of interest to you is by reviewing the company's current annual report. Students can obtain an annual report by going online to www.freeedgar.com for the financial statements and annual reports of every publicly traded company.

Things to Look for in a Company Annual Report

Typically, an easy to read glossy report arrives within a week. The report should be culled for the following information:

Is the company making money?: How has it been doing over the last 5 years? Taking a job with a company that is losing money is a high risk proposition.
Look at sales growth.: What's the trend over the last 5 years? High growth rate companies (15% to 30%/year) means a good chance for a fast promotion.
What do the various divisions manufacture or sell?: Most companies with sales over $100 million are divided into divisions or major product lines. Which areas are you interested in? A company is often a collection of many small businesses and therefore you may wish to be interviewed by two or more divisions.
Where are the plants and offices located?: The most cost effective way of searching out a job with a corporation whose headquarters are in Chicago or San Francisco is to start by calling the local sales office and arranging a screening or informational interview at a local plant or sales office.
Who is on the Board of Directors?: If they are from MIT, Cornell and IBM it tells you one thing. If they are all New York City bankers, it may suggest something else.
Corporate Officers are important people to contact.: The list of corporate officers may include the names of people you should contact, especially in smaller companies with sales of less than $100 million. For example, you may wish to write or call directly to the vice president of engineering, manager of manufacturing or director of sales.
The first 3 pages of most annual reports represent the president's report to stockholders.: In broad, easy to understand terms, s/he tells the world what is going on within the company. What is important, what challenges do they face, and what are the company's goals?
Look for Reports and Company Forcasts from each operating division.: Usually, after the president's report each operating division gives a one page summary of what happened in the current year, and what will happen in next year in terms of new products, plants, markets and technology.
Check previous reports and forecasts: If the latest annual report is a good base, research the two prior years for good information. Did the company do what they said they would?

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Last modified: November 17, 2006 11:57:53