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Financial highlights are a summary of important financial information included in reports such as corporate annual reports, mutual fund prospectuses, and government agency reports. They are used to focus the reader’s attention on positive results and can include performance statistics, net cash flow, financial ratios, and other noteworthy matters. Financial highlights serve as a marketing device to put the best spin on fund performance and can be included in any financial report.
Financial highlights are a summary of the main points of a financial report. They can be included as part of various types of reports, including corporate annual reports, mutual fund prospectuses, and government agency reports. The report typically covers a standard time period, such as a fiscal year, and the financial information highlighted in the report can include anything notable that occurred during that time.
More information than the average person can easily digest is typically included in a financial report. In the same way that a narrative report can be preceded by an executive summary, a financial report can be preceded by financial highlights. Highlights extract the most relevant financial information from the report so that the reader can get the gist of things without necessarily having to read the facts and figures pages. This summary also gives the report preparer an opportunity to call attention to items he considers important, focusing the reader’s attention on positive results rather than letting her form her own opinion.
The most common use of financial highlights is as part of a public corporation’s annual report. Public corporations are required by law to disclose financial information to shareholders and potential investors. They often do this by publishing an annual report detailing the condition of the company. An annual report has a commonly accepted format that places financial highlights first in the report content.
In a corporate context, financial highlights may include performance statistics for the company as a whole and for individual departments and products. Net cash flow can be highlighted, along with any other financial ratios or cumulative amounts that are particularly noteworthy. Other matters may also be included to highlight how they impact the company’s financial outlook, including acquisitions and spin-offs, joint ventures, special events, and product launches.
Another common use of financial highlights involves the use of mutual funds, which are required to disclose historical performance statistics to potential investors. Fund managers often prepare a fund prospectus that provides this information to the public. Financial highlights are often placed at the front of the prospectus to focus investors’ attention on the best financials of the fund. In practice, highlights serve as a marketing device that allows fund managers to put the best spin on fund performance.
Virtually any financial report can present financial highlights. The term is generic enough to label any summary of financial information. For example, an auditor’s report may include highlights to draw attention to important points. Similarly, government agencies that issue financial reports for the benefit of the public often use highlights to summarize the most important information.
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