10-K

Definition

A 10-K is an annual report filed by public companies with the Securities and Exchange Commission (SEC) that provides a comprehensive overview of the company's financial performance, risks, and operational activities. This document is crucial for investors and stakeholders as it offers detailed insights that are essential for making informed investment decisions.

5 Must Know Facts For Your Next Test

1. A 10-K must be filed within 60 to 90 days after the end of a company's fiscal year, depending on its size.
2. It includes several key sections, such as business overview, financial data, risk factors, and management's discussion and analysis (MD&A).
3. The information contained in a 10-K is legally required to be accurate and complete, making it a vital source of information for investors.
4. Companies must also include audited financial statements in their 10-Ks, which add credibility to the reported figures.
5. A 10-K is more detailed than the quarterly reports (10-Q) and provides a broader view of the company's long-term strategy and potential risks.

Review Questions

• What key sections are typically included in a 10-K filing, and why are they important for investors?
  • A 10-K filing typically includes sections such as business overview, financial data, risk factors, management's discussion and analysis (MD&A), and audited financial statements. These sections are important because they provide a comprehensive view of the company's financial health, operational strategies, potential risks, and overall performance. Investors rely on this detailed information to make informed decisions about their investments.
• How does the requirement for audited financial statements in a 10-K enhance its reliability for stakeholders?
  • The requirement for audited financial statements in a 10-K enhances its reliability by ensuring that an independent third party reviews and verifies the accuracy of the financial information presented. This audit process provides stakeholders with greater confidence in the integrity of the reported data, reducing the likelihood of misinformation or manipulation. Audited statements serve as a crucial checkpoint that helps protect investors from potential fraud or misrepresentation.
• Evaluate the role of the 10-K in shaping investor perceptions of company risks and opportunities in today's market.
  • The 10-K plays a vital role in shaping investor perceptions of company risks and opportunities by providing detailed insights into financial performance and potential challenges. By analyzing risk factors outlined in the 10-K, investors can assess how well a company might navigate market fluctuations or industry disruptions. Furthermore, through sections like management's discussion and analysis (MD&A), investors can identify strategic initiatives that may create growth opportunities. This comprehensive overview aids investors in making more informed decisions about their portfolio investments.

Related terms

SEC: The Securities and Exchange Commission, a U.S. government agency responsible for regulating the securities industry and enforcing federal securities laws.

Annual Report: A comprehensive report that publicly traded companies must provide to shareholders annually, summarizing their financial performance and activities over the past year.

MD&A: Management's Discussion and Analysis, a section of the 10-K where management provides an overview of the previous year's performance, including trends and future outlook.