What is 10-K in Finance

This is a detailed annual report which explains the financial performance of a publicly-traded company and is required by the US Securities and Exchange Commission(SEC). The report contains virtually everything about the finance of the company. Once the report is made, it is sent to the shareholders of the company before the annual meeting to elect company directors.

The information contained on the 10-K includes the history of the company, organizational structure, subsidiaries, equity, executive compensation, audited financial reports and so on.

The major reason for this report is to keep investors abreast of the financial history of the company. The report also notifies investors of the important things to know about the company before making investment decisions.

As a result of the information contained in the 10-K,  the report is usually complicated. However, since the aim of the report is to help investors know the necessary things about the company, the more detailed it is, the more investors know about the company.  Here are the five distinct parts of the 10-k.

Business

This is simply a piece of detailed information on what the company does and how it generates its money.  It explains the company's products and services.

Risk Factor

This explains the company's present risk and the risk it might face in the nearest future. To explain this, the risk is usually listed in the order of their importance.

Financial Statement

This aspect explains the financial situation of the company. The report starts with the financial situation of the company from the past five years to its present situation. It highlights the near-time view of the company's finance in the next five years.

Management Discussion And Analysis

This is also known as MDA. It is a detailed analysis of the company's financial condition and results of operations. Here, the company explains its business result starting from the previous year to the present year.

Financial Statements And Supplementary Data

This section explains the company's audited financial statements. It contains the three financial aspects of a company: the company's balance sheet, income statement and cash flow. Attached to this section is a letter from the company's independent auditors validating their stance on the financial information provided.

After a detailed explanation of these five key areas, the 10-K form is then signed by the company's chief financial officer and the chief executive officer. The two executives would write a letter of oath that the information contained in the form is accurate and attached it with the report to be submitted. These letters become a piece of evidence if fraudulent issues arise.

Where To Find A 10-k

Generally, a 10-k is made available to the public through a number of sources, especially the company's website.