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what is a form 10-k

Our writing and editorial staff are a team of experts holding advanced financial designations and have written for most major financial media publications. Our work has been directly cited by organizations including Entrepreneur, Business Insider, Investopedia, Forbes, CNBC, and many others. The information in a 10-K can aid an investor who is researching the company to see whether to buy that company’s stock.

What is the Difference Between 10-K and Annual Report?

  1. By contrast, 10-Ks tend to be very lengthy and more difficult to digest than annual reports.
  2. At the bottom of the form, the company’s independent auditor will include a statement.
  3. For an investor looking to buy bonds, debt should be a particular concern.
  4. The annual report is sent to shareholders each year ahead of the annual shareholder meeting and voting for the board of directors.
  5. The 10-K may also be supplemented by a Form 8-K if a major event such as an acquisition or bankruptcy occurs.

Publicly traded companies are required by the Securities and Exchange Commission (SEC) to file an annual report following the outline provided on Form 10-K. Form 10-K is the most comprehensive compilation of information on a company. The 10-K is a document required by the Securities and Exchange Commission (SEC) for all public companies. It is the best source of information on a company, providing — among other information — a description of the business and industry, risks, a summary of legal proceedings and financial statements. A 10-K is a comprehensive report filed annually by a publicly-traded company about its financial performance and is required by the U.S. The report contains much more detail than a company’s annual report, which is sent to its shareholders before an annual meeting to elect company directors.

Why do publicly traded companies have to publish a 10-K?

Together, they allow you to see what is going on with a company’s finances. Notably, 10-K filings are public information and readily available through a number of sources. In fact, the vast majority of companies include them in the Investor Relations section of their website. A 10-K filing also includes signed letters from the company’s chief executive officer and chief financial officer. In it, the executives swear under oath that the information included in the 10-K is accurate.

what is a form 10-k

Annual Report

Firms worth $700MM or more have 60 days to file after the close of their fiscal year. Both documents are important when analyzing a company, although the 10-K is usually preferred by analysts, given its more comprehensive nature. This letter should detail the scope of the auditing firm’s certification of the financial records, as well as any material deficiencies it uncovered. If the auditor thinks the company could face imminent demise, you might see the auditor referencing a question as to the company’s ability to “continue as a going concern” or something similar. If you ever come across something like those words, alarm bells should go off.

(It’s even called that on, the SEC’s educational website. Strictly speaking, the glossy booklet described above is known as “the annual report to shareholders.” Many forms of debt can make a company go bankrupt that do not show up on the balance sheet due to accounting rules. But the law requires the payments to be disclosed in the Form 10-K filing.

Among other disclosure forms, the SEC requires that a publicly traded company must disclose this information every year in a 10-K report. This is a comprehensive form in which a company presents virtually every piece of information that it is required to make public. Understanding a 10-K can help you know much more about your investments, but they make for very dense reading. It allows them to study the specific ways a company operates and makes its money. It also explains where the company operates and any risks the company faces, including any current and pending lawsuits.

These letters became a requirement after several high-profile cases involving accounting fraud following the dot-com bust. The government requires companies to publish 10-K forms so investors have fundamental information about companies so they can make informed investment decisions. This form gives a clearer picture of everything a company does and what kinds of risks it faces.

Large accelerated filers have a public float of $700 million or more and are required to file within 60 days of the end of their fiscal year. Companies with a public float between $75 million and $700 million are considered accelerated filers and get 75 days. Those with a public float less than $75 million are required to file within 90 days of their fiscal year-end and are considered non-accelerated filers. The Form 10-Q report is filed at the end of each business quarter with the SEC. It is also available to investors through a company’s website and EDGAR.

These obligations are also disclosed somewhere in the Form 10-K, often under a section called “operating leases,” “fixed payments,” or “minimum cash payments due.” Erika Rasure is globally-recognized as a leading consumer economics subject matter expert, researcher, and educator. She is a financial therapist and transformational coach, with a special interest in helping women learn quantity in math definition uses and examples video and lesson transcript how to invest. Investors in the know are aware that 10-Ks can also be retrieved by using the company search function through the SEC’s EDGAR database. In this section Financial Data showing consolidated records for the legal entity as well as subsidiary companies. A substantial number of firms filed their 10-K as a Form 10-K405 during the late 1990s and early 2000s (decade).

A 10-K is a disclosure form required by the SEC for all publicly traded companies. It contains information such as the firm’s financial position, debts and other liabilities, and corporate governance, all key to know for a would-be investor. Sometimes companies will publish for their shareholders an annual report, which is often a distillation of their Form 10-K.

Part III introduces the board of directors and the management team, their experience, qualifications, and compensation. Part III also includes details of stock ownership, and transactions between the company and directors, officers, pro forma wikipedia and their family members. Finance Strategists has an advertising relationship with some of the companies included on this website. We may earn a commission when you click on a link or make a purchase through the links on our site.

The 10-Q does not include all the detailed information, such as background and operations detail, that a 10-K does, and its figures are not audited. Companies file three 10-Qs a year; the fourth quarter is covered by their 10-K. Because of the depth and nature of the information they contain, 10-Ks are fairly long and tend to be complicated. But investors need to understand that this is one of the most comprehensive and most important documents a public company can publish on a yearly basis. The more information they can gather from the 10-K, the more they can understand the company. Canadian companies will file SEC Form 40-F to provide this information.

The form provides investors with various details about a company, including its history, senior management, financials, and risk factors. Company-specific qualitative information is also discussed, including legal proceedings specific to the company as well as to the industry. Generally, a competitive analysis is also provided; typically the names of all competitors are discussed. Investors can compare the wording of the current 10-K to the wording of the previous 10-K, zeroing in on any variations in tone to see if slight changes have occurred that may affect the future operating environment. This section lists the principal risks facing a business, which could include risks unique to that organization or broader developments affecting the entire economy. This section is crucial, since it contains information that could easily affect the company’s future financial performance.

According to the SEC, “many investors see this disclosure as a red flag.” This part of the document describes any risks the company may be facing that investors should know about. However, the general rule is that the risk factors go in order of importance. Here, management discusses the operations of the company in detail by usually comparing the current period versus prior period. These comparisons provide a reader an overview of the operational issues of what causes such increases or decreases in the business.