10-K
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What is a 10-K?
A 10-K is an annual report in a standardized form. For all publicly traded U.S. companies, the Securities and Exchange Commission (SEC) requires the filing of this report. In contrast to a traditional annual report, a 10-K contains a greater amount of information. The purpose of the report is to provide investors with a more comprehensive understanding of a company. A 10-K report can be extremely complex due to the volume of information it contains, as well as its nature. SEC regulations strictly govern the form. The 10-K provides the information in a much more straightforward manner than, for example, a non-standardized corporate annual report. Nevertheless, the report is a very valuable document for investors to obtain comprehensive information about a company. When analyzing the report, it may be useful to engage a specialist, such as an independent wealth manager.
The information documented in the 10-K includes, for example:
- Organizational structure
- Company history
- Earnings per share
- Financial statements
- Subsidiaries
- Executive compensation
- Other relevant data
Thus, the 10-K provides an overview of all of a company's activities and risks. Since 10-K reports are public information, they can be easily accessed by the general public. The "Investor Relations" section of company websites often contains these documents. The SEC's EDGAR database also contains all 10-K reports.
Companies are also required to file
Form 10-Q during the first three quarters. Q stands for quarter. Following the final quarter, a 10-K is filed. In the event of a bankruptcy, divestiture, or acquisition, an 8-K form must be filed. As a result,
8-Ks are not filed on a regular basis, but rather only in exceptional circumstances.
10-K Content
By default, a 10-K comprises four parts and 15 subject areas. In general, a 10-K contains the following important items:
- Business: This section outlines the company's primary activities.
- Risk Factors: In this section of the report, the risks associated with the company are described. Risks are arranged in descending order.
- Financial Data: The purpose of this section is to provide a brief overview of the company's financial performance over the last five years.
- Management's Analysis of Financial Condition and Results of Operations (MD&A): This section provides an overview of the company's financial condition during the most recent fiscal year.
- Financial Statements and Supplementary Data: In this section, you will find the audited financial statements, such as the income statement, balance sheet, and cash flow statement.
A 10-K report must contain accurate information, which must also be verified and signed in writing by the company's chief executive officer (CEO) and chief financial officer (CFO). After the dot-com bankruptcy, several cases of accounting fraud led to the requirement for signatures. If there is a violation, both the CEO and CFO can be held responsible.
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