What is a K-10?
A 10-K is a comprehensive report filed annually by a publicly traded company on its financial performance and is required by the United States Securities and Exchange Commission (SEC). The report contains much more detail than the annual report of a company, which is sent to its shareholders before an annual meeting to elect the directors of the company.
Some of the information that a company must document in 10-K includes its history, organizational structure, financial statements, earnings per share, subsidiaries, executive compensation and any other relevant data.
SEC requires that this report keep investors informed of a company’s financial situation and allow them to have sufficient information before buying or selling shares of the company, or before investing in bonds of the company’s business.
Understanding the 10-K
Because of the depth and nature of the information they contain, the 10-K are long enough and tend to be complicated. But investors should understand that this is one of the most comprehensive documents and the most important that a public company can issue annually. Plus they can gather information about the 10-K, the more they can understand the business.
The government requires businesses to publish 10-K forms so that investors have basic business information so they can make informed investment decisions. This form gives a clearer picture of what a company does and the types of risks it faces.
10-K includes five distinct sections:
- Business. This gives an overview of key business operations, including its products and services (that is to say, how it makes money).
- Risk factors. These describe all the risks the company is facing or may face in the future. Risks are generally listed in order of importance.
- Selected financial data. This section details the specific financial information to the company over the past five years. This section presents more of a short-term view of the recent performance of the company.
- Discussion and analysis of the direction the financial condition and results of operations. Also known as the MD name, it gives the company the opportunity to explain its business results for the previous year. This section is where the company can tell his story in his own words.
- Financial statements and additional data. This includes the audited financial statements of the company, including the income statement, balance sheet and statement of cash flows. A letter from the independent company auditor certifying the scope of their examination is also included in this section.
A record 10-K also includes signed letters of CEO and CFO of the company. In it, the leaders swear under oath that the information contained in the 10-K is accurate. These letters have become a requirement after several high-profile cases of accounting fraud following the dot-com bankruptcy.
Where to find a 10-K
Notably, the 10-K filings are public information and readily available through a number of sources. In fact, the vast majority of companies include in the Investor Relations section of their website. The information in a 10-K may be difficult to navigate, but the more investors become familiar with the presentation and the type of information included, it will likely become easier to identify the most important details.
Savvy investors know that 10-K can also be retrieved using the company search function via the SEC’s EDGAR database.
Key points to remember
- A 10-K is a comprehensive report submitted each year by public companies on their financial performance.
- The report is required by the Securities and Exchange Commission (SEC) of the United States and is much more detailed than the annual report.
- The information contained in the 10-K include the company history, financial statements, earnings per share and other relevant data.
- The 10-K is a useful tool for investors to make important decisions about their investments.
10 KB filing deadlines
The deadlines for the 10-K will vary depending on the size of the company. According to the SEC, companies with a public float – publicly available shares that are available for trading – of $ 700 million or more must deposit their 10-K within 60 days of the end of their fiscal year. Companies with free float between $ 75 million and $ 700 million have 75 days, while companies with free float below $ 75 million have 90 days.
Form 10-Q and 8-K
Alongside the 10-K, the SEC requires public companies routinely file Forms 10-Q and 8-K.
The Form 10-Q to be filed with the SEC quarterly. This form is a comprehensive report on the performance of a company and includes relevant information on its financial situation. Unlike the 10-K, 10-Q information is generally not audited. The company is holding the file that three times a year since 10-K is filed in the fourth quarter.
The 8-K form is however required by the SEC each time companies announce major events of which shareholders must be informed. These events may include (but are not limited to) sales, acquisitions, write-offs, departures and elections of officers, as well as changes in the status or control of a business, bankruptcies, information about operations, assets and any other relevant news.