Day Trading Encyclopedia

SEC Filings Form 10-K

Form 10-K

What it is

This is the annual report filed by public traded companies to the SEC. Companies with more than $10 million in assets and 500 shareholders are required to file this form. This is not to be confused with the annual report to the shareholders usually mailed to shareholders ahead of the annual shareholders meeting. The 10-K annual report is has to be filed within 75 to 90 days of the end of the fiscal year, contingent on type of filer. The report is comprised of four main parts and 15 subsections.

How to Read a Form 10-K

The 10-K is structured to bring any new investor up to date on the business operations. It’s a good idea to start from the beginning and read about the business and risk factors in the beginning. The properties section should be reviewed to get an idea of tangible real estate and physical assets owned by the company, which help to make up its book value. A review of legal proceedings is prudent to see if company is under any significant lawsuits that could have a material impact on business operations. The financial statements should also be read comparing the results to prior year if possible to gauge the growth in revenues, profits or losses.

Things to Look Out For

The auditor’s opinion can have a material impact if the question of ‘going concern’ is mentioned. Although this can be a standard formality for legal purposes, stocks have been known to sell-off hard when an auditor mentions that it has doubts that the company can continue as a ‘going concern’. Naturally, it’s important to measure the company metrics to see if business is growing, contracting or declining.