Key Takeaways
- Annual SEC report on company financials and operations.
- Includes business overview, risk factors, and financial statements.
- Filing deadlines vary by company size, 60 to 90 days.
- Mandatory for companies with over $10 million in assets.
What is 10-K?
A 10-K is a comprehensive annual report that publicly traded companies file with the U.S. Securities and Exchange Commission (SEC), detailing their financial condition, operations, and risks. This essential disclosure provides investors and analysts with an in-depth view of a company’s business, including audited financial statements prepared under GAAP standards.
The 10-K differs from a company’s glossy annual report to shareholders, focusing instead on regulatory compliance and transparency for stakeholders.
Key Characteristics
The 10-K report is structured into several mandated sections that provide transparency and accountability:
- Business Overview: Describes company operations, subsidiaries, markets, and competition.
- Risk Factors: Lists potential challenges and uncertainties that could impact the company’s performance.
- Financial Statements: Includes audited balance sheets, income statements, and cash flow statements prepared according to GAAP.
- Management Discussion and Analysis (MD&A): Offers management’s perspective on financial results and future outlook.
- Legal Proceedings: Details ongoing litigation that may affect the company.
- Filing Deadlines: Deadlines vary by company size, typically between 60 and 90 days after fiscal year-end.
How It Works
Public companies, including C-corporations, must file a 10-K annually to maintain compliance with SEC regulations. The report consolidates financial data and disclosures that give you a transparent view of the company’s fiscal health and risks.
Investors use the 10-K to assess earnings quality, operational trends, and balance sheet strength. The inclusion of paid-in capital and other equity details helps you understand shareholder investment and company financing. Accurate and timely 10-K filings can influence a company’s stock rally or decline based on investor confidence.
Examples and Use Cases
Many well-known companies provide detailed 10-K reports that highlight their business strategies and financial positions:
- Airlines: Delta and American Airlines use their 10-K filings to disclose fleet details, fuel costs, and regulatory risks impacting operations.
- Large-Cap Stocks: Investors often review 10-Ks of top companies listed in guides such as best large-cap stocks to evaluate stability and growth potential.
- Exchange-Traded Funds (ETFs): Some ETFs hold companies whose 10-K reports provide insight into sector performance, making these reports useful when analyzing funds like those in our best ETFs guide.
Important Considerations
When reviewing a 10-K, pay close attention to risk disclosures and the MD&A section to understand management’s view of challenges and opportunities. Remember, the accuracy of financials is certified by the company’s CEO and CFO, ensuring accountability under laws like Sarbanes-Oxley.
Also, consider the filing deadlines and any unresolved SEC comments, as delays or issues may signal underlying problems. Using 10-K reports alongside other financial tools can enhance your investment decisions.
Final Words
A Form 10-K offers a detailed, audited snapshot of a company’s financial health and risks, crucial for informed investment decisions. Review the latest 10-K filings of companies in your portfolio to identify potential opportunities or red flags.
Frequently Asked Questions
A Form 10-K is an annual report required by the SEC that provides a detailed summary of a company's financial performance and business operations. It offers investors and stakeholders a comprehensive overview of the company’s history, structure, earnings, and risks.
Companies with more than $10 million in assets and a class of equity securities held by over 2,000 owners must file a 10-K. This applies whether their securities are publicly or privately traded.
The 10-K includes four main parts covering the business description, risk factors, legal proceedings, financial data, management’s discussion, and audited financial statements such as the balance sheet, income statement, and cash flow statement.
Filing deadlines depend on company size: large companies with a public float over $700 million must file within 60 days, mid-sized companies within 75 days, and smaller companies within 90 days after their fiscal year ends.
A 10-K is a detailed SEC-required document focused on financial and operational disclosures, while the annual report to shareholders is often a more polished and promotional document. Some companies combine both into one report.
'Risk Factors' is a section in the 10-K that outlines potential problems or external issues that could negatively impact the company’s performance. This helps investors understand possible risks before investing.
The 10-K includes the balance sheet, income statement, and cash flow statement, accompanied by notes explaining accounting policies, taxes, pension plans, and stock options.
