A 10-K is an annual report filed by publicly-traded companies about their financial performance for the year. The report is required by the Securities and Exchange Commission (SEC) and is sent to all shareholders for a company.
Some of the information included in a 10-K are company history, organizational structure, financial statements, earnings per share, compensation for executives, and more. The purpose of this report is for investors to be kept aware of a company’s finances so that they can make informed decisions about buying or selling shares.
What Goes Into a 10-K?
Generally, 10-Ks are quite long and often somewhat complicated, but they also provide a highly detailed account of how a company is doing, allowing investors to fully understand what they’re getting into.
A 10-K form includes five sections:
The business section provides an overview of a company’s operations, outlining how the company makes money.
2. Risk Factors
The risk factors section lists all of the risks a company faces or might face in the future, listed in order of importance.
3. Selected Financial Data
This section outlines the company’s financial information over the past five years in order to give an idea of the company’s performance.
4. Management Discussion and Analysis (MD&A)
The management discussion and analysis section shows the financial condition of the company and the results of company operations. In this section, the company can include an explanation of the past year’s business results.
5. Financial Statements and Supplementary Data
This section includes the company’s income statement, balance sheets, cash flows, and audited financial statements. The company’s independent auditor will also include a letter in this section certifying their review of the finances.
Some additional information in a 10-K includes signed letters from the company’s chief executive officer and chief financial officer, certifying that all of the information in the report is accurate.
How to Access a 10-K
Investors can access a company’s 10-K form by using the SEC’s EDGAR database. 10-K reports are always publicly available, and some companies even include them on the “Investor Relations” section of their website.
In the case of commercial real estate investments, it’s always a good idea to investigate a company’s 10-K forms before committing to any partnerships or investments, so you can make informed decisions with your money.