SAN ANTONIO – If you’re looking to invest in the stock market but don’t have enough information about a public company to make sure you’re making a good choice, a company’s annual 10-K can give you a wealth of information regarding its finances.
A 10-K is an annual report required by the U.S. Securities and Exchange Commission, which gives a summary of a public company's financial performance.
The SEC said a 10-K offers a detailed picture of what the company does and the risks it faces.
Here are five important sections to look for in a 10-K:
- There’s the “business” section, which describes the company’s main products and services. It helps an investor understand a company better.
- The "risk factors" section details information about big risks a company faces, and the risks are generally listed in order of importance.
- The section labeled selected "financial data" gives investors financial information about the company for the past five years.
- The section labeled "management's discussion and analysis of financial condition and results of operations," or MD&A, gives an investor the company's view on the business results of the past fiscal year. The SEC says this section allows management to tell its story in its own words.
- Finally, the "financial statements and supplementary data" section in the 10-K contains the company's financial statements, which include the company's income statement, balance sheet and the statement of cash flows.
You can usually find a public company's 10-K on its investor relations page or by using the SEC’s EDGAR search tool.
For more information on reading 10-Ks from the SEC, click here. You can access the SEC’s search tool by clicking here.
