statement of earnings http://www.wisebread.com/taxonomy/term/8982/all en-US To Stay on Financial Track, Perform a Yearly Earnings Review http://www.wisebread.com/to-stay-on-financial-track-perfom-a-yearly-earnings-review <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/to-stay-on-financial-track-perfom-a-yearly-earnings-review" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/5857728038_a70232596a_z.jpg" alt="calculator and cash" title="calculator and cash" class="imagecache imagecache-250w" width="250" height="141" /></a> </div> </div> </div> <p>You probably have an excellent idea of how much money you make, perhaps down to the exact dollar in each paycheck. In your mind's eye, you may think of that number as trending upward each year you gain experience &mdash; with the exception of the times that you spent unemployed, attending college as a full-time student, or taking a family leave of absence.</p> <p>But this imagined trajectory may or may not represent reality. The upward mobility may not be rising as quickly as you had hoped when you bought your house, committed to a car payment, signed on to send your kids to private school, or dreamed about your retirement. Or, you may be making plenty of moneybut your net worth is not increasing as rapidly as your income. (See also:&nbsp;<a href="http://www.wisebread.com/perform-a-credit-card-rewards-annual-review">Perform a Credit Card Rewards Annual&nbsp;Review</a>)</p> <h2>Why You Should Check Your Earnings</h2> <p>Taking a look at your annual earnings gives you the unfiltered truth about where your career and compensation are headed. Although there are more factors in achieving happiness and building wealth than increasing take-home pay, considering your annual earnings over time is a worthwhile endeavor.</p> <p>You may have a spreadsheet detailing your income, spending plan, and assets to measure their progression, stagnation, or decline. If not, you can access annual earnings online at the federal government's <a href="http://ssa.gov/" target="_blank">Social Security Administration (SSA) website</a>. Rod Griffin, director of public education for Experian (a credit reporting company), recommends that you consider adding this habit to your financial routine at least once a year, just as you might <a href="http://www.experian.com/blogs/news/2012/12/14/check-credit-reports/" target="_blank">check your credit report</a>. Here's why:</p> <p><strong>Trends in Earnings Can Guide Decisions About Next Steps Professionally</strong></p> <p>This financial snapshot of your career may prompt you to reconsider direction or give you the impetus to make changes that you have been mulling over. For example, you may decide to pursue a position with another company; <a href="http://www.wisebread.com/earn-more-money-by-demanding-it" target="_blank">negotiate a better salary or hourly rate</a> with your employer; drop a part-time job because its value isn't worth the extra cost of commuting, eating out, etc.; find higher-paying freelance clients; or <a href="http://www.wisebread.com/how-to-make-a-major-career-switch-without-going-back-to-school" target="_blank">switch careers</a>.</p> <p><strong>Verify the Accuracy of Your Records</strong></p> <p>You'll want to check the accuracy of your earnings. A byproduct of verifying accuracy is making sure that no one is tampering with your information. Checking your Social Security info is similar to looking at your credit report each year to note anything unusual and make corrections as quickly as possible. Such habits can help prevent identity theft.</p> <p><strong>Earnings Information Is Needed for Financial Planning Purposes</strong></p> <p>Even if you are happy with your income trends, an earnings report is useful for financial planning. A financial advisor should want to get this information to help you <a href="http://thechicagofinancialplanner.com/2012/07/25/financial-planning-really-does-make-a-difference/" target="_blank">develop a financial plan</a>. At the same time, you can access estimated benefits in retirement, which may be a factor in <a href="http://www.wisebread.com/7-essential-truths-for-a-successful-retirement" target="_blank">determining how much you need to retire</a>.</p> <p>Note that your regular earnings may differ from your Social Security wages for various reasons, including tax-deferred contributions to employer-sponsored <a href="http://www.wisebread.com/choosing-a-retirement-account-whats-available-and-what-s-best-for-you" target="_blank">retirement accounts</a> that lower your taxable wages for federal tax purposes. Mike Piper, CPA and author of &quot;Social Security Made Simple&quot; and the Oblivious Investor blog, explains that <a href="http://www.obliviousinvestor.com/do-401k-and-ira-contributions-reduce-my-social-security-benefits/" target="_blank">pre-tax 401(k) contributions reduce federal income taxes but not Social Security taxes</a>. So, refer to your W-2 (specifically Box 3 &mdash; Social Security wages) and other tax statements when checking your earnings on the SSA website.</p> <p>During your visit, you can also <a href="http://ssa.gov/onlineservices/#a0=5" target="_blank">take care of tasks</a> like these:</p> <ul> <li>Learn how to change your name on your Social Security records and get a new card after getting married</li> <li>Determine estimated Social Security benefits for your surviving children and spouse if something happened to you</li> <li>Change your address if you are currently receiving benefits</li> </ul> <h2>How to Check Your Earnings</h2> <p>To check your earnings, you'll need to set up an online &quot;<a href="http://ssa.gov/myaccount/" target="_blank">my Social Security</a>&quot; account on the SSA website. There are just a few starting requirements. You must:</p> <ul> <li>Be 18 years old or older</li> <li>Have a valid email address and U.S. mailing address</li> <li>Have a Social Security number</li> </ul> <p>When you create the account, you'll need to answer some security questions that Sal Guariano, vice president of government services at Experian, describes as the authentication process. The credit reporting firm developed this process in collaboration with the SSA to make sure that your information is secure.</p> <p>You'll be asked a series of questions to which only you should know the answers. Sal mentions that even if <a href="http://www.wisebread.com/5-things-to-never-keep-in-your-wallet" target="_blank">someone stole your wallet</a>, the thief couldn't extract the answers based on your driver's license and plastic cards.</p> <p>Note, however, if you have placed a <a href="https://www.experian.com/fraud/center.html" target="_blank">fraud alert</a> or a <a href="http://www.experian.com/consumer/security_freeze.html" target="_blank">freeze on your credit report</a>, then you will need to take some extra steps to create an online account. Lift these restrictions temporarily because the SSA works with the credit agency to verify information as part of its security precautions.</p> <p>After you set up your account and log in, viewing your earnings is easy. You can also locate your estimated benefits at full retirement age as well as earlier and later retirement ages. Precisely what will happen in the future with your retirement benefits is not predictable. But seeing what has happened with your earnings in the past can be useful as you plot next steps.</p> <p><em>Have you found that viewing your income and net worth over time is useful? What changes did you make to have a better future?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/julie-rains">Julie Rains</a> of <a href="http://www.wisebread.com/to-stay-on-financial-track-perfom-a-yearly-earnings-review">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-american-cities-where-you-can-retire-on-just-social-security">5 American Cities Where You Can Retire On Just Social Security</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-financial-moves-now-that-youll-regret-when-you-retire">5 Financial Moves Now That You&#039;ll Regret When You Retire</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/13-crucial-social-security-terms-everyone-needs-to-know">13 Crucial Social Security Terms Everyone Needs to Know</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-smart-ways-to-boost-your-social-security-payout-before-retirement">6 Smart Ways to Boost Your Social Security Payout Before Retirement</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-reasons-early-retirement-might-be-financially-risky">4 Reasons Early Retirement Might Be Financially Risky</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Organization Retirement financial planning social security statement of earnings Thu, 14 Mar 2013 10:48:30 +0000 Julie Rains 969765 at http://www.wisebread.com How To Read an Annual Report http://www.wisebread.com/how-to-read-an-annual-report <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-read-an-annual-report" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/how to read an annual report.jpg" alt="annual report" title="annual report" class="imagecache imagecache-250w" width="250" height="375" /></a> </div> </div> </div> <p class="MsoPlainText">Once a year you may receive these bulky packages in the mail for each of the stocks or <a href="/mutual-funds-for-wise-bloggers" target="_blank">mutual funds</a> in your portfolio. You'd like to take interest in them, really. You know it would enlighten you as to the inner workings of your investments and turn you into that much more a savvy investor. You want to read them. You open them up, with the intention of scouring them for divine investment wisdom.</p> <p class="MsoPlainText">&nbsp;</p> <p class="MsoPlainText">And after about five minutes, with eyes glazed over, your annual report finds its way to the place where oh so many annual reports find themselves: the recycle bin.</p> <p class="MsoPlainText">&nbsp;</p> <p class="MsoPlainText">You are not alone! Here are the basics of reading an annual report, so you can get the most out of it.</p> <p class="MsoPlainText">&nbsp;</p> <p class="MsoPlainText">Once a year you may receive these bulky packages in the mail for each of the stocks or <a href="/mutual-funds-for-wise-bloggers" target="_blank">mutual funds</a> in your portfolio. You'd like to take interest in them, really. You know it would enlighten you as to the inner workings of your investments and turn you into that much more a savvy investor. You want to read them. You open them up, with the intention of scouring them for divine investment wisdom.</p> <p class="MsoPlainText">&nbsp;</p> <p class="MsoPlainText">And after about five minutes, with eyes glazed over, your annual report finds its way to the place where oh so many annual reports find themselves: the recycle bin.</p> <p class="MsoPlainText">&nbsp;</p> <p class="MsoPlainText">You are not alone! Here are the basics of reading an annual report, so you can get the most out of it.</p> <p class="MsoPlainText">&nbsp;</p> <p class="MsoPlainText">An annual report can be comprised of many different components, including the following:</p> <ul> <li>Financial Statements</li> <li>Chairman&rsquo;s Address</li> <li>Corporate Address</li> <li>Listing of Board of Directors</li> <li>Stockholder information</li> <li>Auditor&rsquo;s report</li> <li>Management messages</li> </ul> <p class="MsoPlainText">&nbsp;</p> <p class="MsoPlainText">There are many other miscellaneous pieces of information contained in an annual report, which vary from company to company. But the bulk of information of interest to investors is usually contained in the <strong>Financial Statements</strong>. This article will address these statements in detail.</p> <p class="MsoPlainText">&nbsp;</p> <p class="MsoPlainText">There are <strong>three components to a company&rsquo;s financial statements</strong> as part of their annual report:</p> <ul> <li>Cash Flow Statement</li> <li>Balance Sheet</li> <li>Income Statement</li> </ul> <p class="MsoPlainText">&nbsp;</p> <p class="MsoPlainText">All components compare statistics year over year, showing the past one to three years' stats, in addition to the most recent year's stats. This allows you, the investor, to relatively compare the numbers to see how the company is progressing overall.</p> <p class="MsoPlainText">You can detect if that company is getting its act together since a recent takeover, how an industry is reacting to certain pressures, and (most importantly) whether or not to keep your money invested (or invest more).</p> <p class="MsoPlainText">You can see where they are spending their cash, and how it is translating into revenue for the company, and ultimately for the investors. You can also see the source of their incoming cash: whether it takes the form of profits, sale of goods, or new investment money coming in.</p> <p class="MsoPlainText">&nbsp;</p> <p class="MsoPlainText">The three components of an annual report marry nicely to provide a true picture of the solvency and direction of a company.</p> <p class="MsoPlainText">&nbsp;</p> <h2>Cash Flow Statement</h2> <p class="MsoPlainText">Just as it sounds, a cash flow statement details all the money flowing in and out of the company.</p> <p class="MsoPlainText">It contains <strong>three main sections</strong>:</p> <ul> <li>Operations</li> <li>Investing</li> <li>Financing</li> </ul> <p class="MsoPlainText">&nbsp;</p> <h3><strong>Operations</strong></h3> <p class="MsoPlainText">This will detail the company's earnings, as well as depreciation of assets and inventory changes (increases in inventory use up cash, and reductions provide cash).</p> <p class="MsoPlainText">&nbsp;</p> <h3><strong>Investing</strong></h3> <p class="MsoPlainText">Expenses in this category include investing in new supplies, property, equipment, land, and anything that will generally add value to the business. Investments that have been made over the year will show as a negative number (but will ideally increase the value of the business or their ability to turn a profit).</p> <h3><strong>Financing</strong></h3> <p class="MsoPlainText">Positive numbers in this section indicate where the company is getting its money from: selling stocks, bonds, or borrowing from the bank.<span> </span></p> <p class="MsoPlainText">Negative numbers show the company buying back stock from holders, paying out dividends, and repaying borrowed cash.</p> <h3><em><strong>What to look for in the Cash Flow Statement</strong></em></h3> <p class="MsoPlainText">Ideally you want to see that they can <strong>pay for their Investment activities with their Operations activities</strong>. Having to use Financing to stay afloat is a losing proposition for an established company and a bad sign.</p> <p class="MsoPlainText">If the <strong>financing number is negative, that&rsquo;s actually a good thing</strong>. It means the company is buying back stock to keep the value high.</p> <p class="MsoPlainText">&nbsp;</p> <p class="MsoPlainText">&nbsp;</p> <h2>Income Statement (also known as Statement of Earnings or Statement of Operations)</h2> <p class="MsoPlainText">This is the statement that shows the bottom line: profit or loss. It depicts the money coming in from sales, and the expenses associated with making those sales.</p> <p class="MsoPlainText">&nbsp;</p> <p class="MsoPlainText">You&rsquo;ll generally see a number of subsections in the Income Statement:</p> <ul> <li>Sales/Operating Revenue</li> <li>Sales Costs</li> <li>Gross Profit</li> <li>Operating Expenses</li> <li>Operating Income</li> <li>Net Profits (Earnings)</li> </ul> <p class="MsoPlainText">&nbsp;</p> <h3><strong>Sales/Operating Revenue</strong></h3> <p class="MsoPlainText">Just as it sounds, this section will detail how the company is making money; through sales of goods and provision of services.</p> <h3><strong>Sales Costs</strong></h3> <p class="MsoPlainText">There is always a cost of doing business, which you&rsquo;ll see outlined here. Only expenses directly related to the sales revenue will be included though; costs to turn raw materials into finished products, salaries of those workers, and overhead of the facility.</p> <p class="MsoPlainText">You won&rsquo;t see a number of other expenses that could be construed as contributing to the sale of goods, like marketing and research.</p> <h3><strong>Gross Profit</strong></h3> <p class="MsoPlainText">Subtract Sales Costs from Sales Revenue, and you have your gross profit (or loss).</p> <h3><strong>Operating Expenses</strong></h3> <p class="MsoPlainText">Here come the rest of the expenses not listed in the Sales Costs section.</p> <h3><strong>Operating Income</strong></h3> <p class="MsoPlainText">Subtract the Operating Expenses from the Gross Profit and you have Operating Income.</p> <p class="MsoPlainText"><strong>This is a key number in the report</strong>, because it truly gives a picture of their ability to turn a profit with their price points given the costs associated with operating the business.</p> <p class="MsoPlainText">&nbsp;</p> <h3><strong>Net Profits (Earnings)</strong></h3> <p class="MsoPlainText">There are still a few key expenses to take in to account, which are detailed in this section. The main expenses include interest payments to bondholders and taxes.</p> <p class="MsoPlainText">At the bottom of this section you&rsquo;ll see the magic number: Net Profits/Net Income or Earnings.</p> <p class="MsoPlainText">&nbsp;</p> <h3><em><strong>What to look for in the Income Statement</strong></em></h3> <p class="MsoPlainText">This statement depicts the company&rsquo;s true &ldquo;bottom line&rdquo; (on the bottom line!) year over year. Obviously you want the number to be positive, and <strong>ideally you want it to grow year over year</strong>.</p> <p class="MsoPlainText">If you take the net income and divide into it the number of outstanding shares the company has, you will get <strong>Earnings Per Share (EPS)</strong>, a common valuator investors use to determine the viability of a company. Rarely is this full amount distributed to the investors though; it is often retained to be invested in future business activities (hence the term Retained Earnings).</p> <p class="MsoPlainText">&nbsp;</p> <p class="MsoPlainText">&nbsp;</p> <h2>Balance Sheet (also known as the Statement of Financial Position)</h2> <p class="MsoPlainText">Similar to a personal balance sheet, you will see Assets and Liabilities itemized.</p> <p class="MsoPlainText">&nbsp;</p> <h3><strong>Assets</strong></h3> <p class="MsoPlainText">Within this category you will often see two main sub-categories: <strong>Current Assets and Fixed Assets</strong>.</p> <p class="MsoPlainText">Current assets include cash and anything that can relatively easily be converted to cash. Fixed (or non-current) Assets include less liquid assets: property, and depreciable assets like machinery.</p> <h3><strong>Liabilities</strong></h3> <p class="MsoPlainText">Similar to assets, Liabilities can be divided into two categories; <strong>Current and Fixed/Non-Current/Long Term</strong>. Current liabilities are those that can and need to be paid within the year; long-term are beyond one year.</p> <p class="MsoPlainText">Among liabilities, you will see money owed to banks, money owed to investors, taxes owing, and other miscellaneous accounts payable items.</p> <h3><strong>Shareholder&rsquo;s Equity</strong></h3> <p class="MsoPlainText">This is simply expressed as <strong>Assets minus Liabilities</strong>. It is representative of what the owners (shareholders) own.</p> <p class="MsoPlainText">&nbsp;</p> <h3><em><strong>What to look for in the Balance Sheet</strong></em></h3> <p class="MsoPlainText">Obviously you would like the bottom line (Shareholder&rsquo;s Equity) to be a positive number!</p> <p class="MsoPlainText">But beyond that, some attention should go into <strong>what exactly the assets are made up of</strong>. If a large part of the assets are in the form of retained earnings from previous years, then the company&rsquo;s &ldquo;bottom line&rdquo; for the year really isn&rsquo;t as good as it may first appear. (That&rsquo;s why you cross-reference this report with the Income Statement).</p> <p class="MsoPlainText">&nbsp;</p> <h3><strong>Some extra references for your reading pleasure include:</strong></h3> <p class="MsoPlainText"><a href="http://www.ibm.com/annualreport/2004/annual/guide_glossary.shtml" target="_blank">IBM&rsquo;S Glossary of Terms</a></p> <p class="MsoPlainText"><a href="http://moneychimp.com/articles/financials/fundamentals.htm" target="_blank">Money Chimp&rsquo;s How to Read an Annual Report</a></p> <p class="MsoPlainText">&nbsp;</p> <p class="MsoPlainText">&nbsp;</p> <p class="MsoPlainText">And if you're still falling asleep before you reach page three of the annual report, <strong>consider electing not to receive annual reports</strong>. It will save the company on printing and postage fees (which in turn sends more profits to you the investor!), as well as save resources that are otherwise being wasted. It doesn't make you a bad investor; rather it makes you a realistic and environmentally savvy one. Just make sure you get your investment advice from a <a href="/how-to-choose-a-financial-planner-yes-you" target="_blank">solid and trusted source</a> if you&rsquo;re not willing or able to go the distance yourself.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/nora-dunn">Nora Dunn</a> of <a href="http://www.wisebread.com/how-to-read-an-annual-report">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-ways-to-tell-if-a-stock-is-worth-buying">9 Ways to Tell If a Stock is Worth Buying</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-investments-that-may-soar-during-trumps-term">8 Investments That May Soar During Trump&#039;s Term</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/3-ways-your-cash-rewards-can-make-you-rich">3 Ways Your Cash Rewards Can Make You Rich</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-investments-that-usually-soar-during-the-summer">7 Investments That Usually Soar During the Summer</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-easiest-way-to-invest-in-the-worlds-biggest-companies">The Easiest Way to Invest in the World&#039;s Biggest Companies</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment annual report balance sheet cash flow statment financial statements income statement reading annual reports statement of earnings Sat, 22 Mar 2008 00:32:57 +0000 Nora Dunn 1941 at http://www.wisebread.com