Financial reports, also known as financial reports, are financial statements and financial analysis reports that all U.S. listed companies must submit to the U.S. Securities and Exchange Commission (SEC) on a regular or irregular basis, clearly and in detail disclosing the company's operations during the financial reporting period. As shareholders of a company, investors have the right to know this information, and as potential investors, they can analyze the company's investment value through these public financial reports and changes. Therefore, by reading a company's financial report, you can intuitively understand a company. How many types of financial reports are there? How to read? Financial report, also known as Financial Report in English, refers to the financial statements and financial analysis reports that listed companies need to report to the U.S. Securities and Exchange Commission (SEC) every quarter or year, and when the company undergoes important changes. Depending on the frequency of reporting, the main ones are: The 10-K financial report (10-K Report) that must be submitted after the end of each year, also often called the 10-K form (Form 10-K) The 10-Q financial report (10-Q Report) that must be submitted after the end of each quarter, also often called the 10-Q form (Form 10-Q) The 8-K financial report (8-K Report) that needs to be submitted when the company undergoes important financial changes, personnel changes, etc., is also often called the 8-K form (Form 8-K). Among them, quarter and year refer to the quarter and year in the company's financial year, which are not necessarily synchronized with the natural year. For example, Apple's financial year is the end of September every year. 10-Q10-K8-K Frequency of submitting reports After the first three quarters of the financial year After the financial year-end After major financial, personnel and other company changes occur, Number of reports submitted Three times a year, in the first three quarters of the financial year once a year No fixed number of times, submit when necessary Reporting deadline Public float <$75MM: within 45 days after the end of the quarter; $75MM ≤ public float < $700MM: within 40 days after the end of the quarter; Public float ≥$700MM: within 40 days after the end of the quarter; Public float <$75MM: within 90 days after the end of the year; $75MM ≤ public float < $700MM: within 75 days after the end of the year; Public float ≥$700MM: within 60 days after the end of the year; Form 8-K is required within four business days of most incidents; Changes in auditors need to be reported within two working days; Changes in senior leadership can be reported after the press conference; The acquired company's Form 8-K can be filed within 71 calendar days of completion of the acquisition. Main content Part One: The company’s relevant financial information during the quarter, including concise financial statements, management’s discussion and analysis of the entity’s financial position, disclosure of market risks and internal controls, etc. Part 2: All other relevant information, including legal proceedings, unregistered sales of equity securities, use of proceeds from unregistered equity sales and defaults on preferred securities encountered by the company during the quarter. The company's financial situation for the entire year, including the fourth quarter, involves the content covered by the 10-Q financial report, including the company's operating summary, management's financial prospects, financial statements, and any legal or administrative issues involving the company. Therefore, 10-K replaces the 10-Q for the fourth quarter. The financial statements used in the 10-K financial report must be audited statements.
Major financial and personnel changes that occur to the company, including but not limited to: bankruptcy, the occurrence of major debts, events involving major obligations such as loan defaults, changes related to reduction of expenditures such as layoffs, factory closures, etc., changes in basic business policies or policy implementation, delisting from the stock exchange, modification of shareholder rights, changes in the registrant’s certification accountant, and key management personnel Elections, appointments and resignations, etc., amendments to the company's articles of association, changes in the accounting cycle, suspension of trading under employee benefit plans, financial changes that are different from previously issued financial statements, acquisition or acquisition by another company, corporate reorganization, modification or abandonment of ethics, changes in the status of shell companies, voting results at shareholder meetings, certain financial statements and other special events, etc. Is audit required? Submit without audit Must be audited before submission No audit required Consequences of not submitting in time If the stipulated submission period has passed, but a non-timely 10-Q financial report (Non-Timely / NT 10-Q) deemed reasonable by the SEC is submitted within the next five days, the financial report submission obligation for that time period can be deemed to have been completed; If you fail to provide untimely 10-Q financial reports, you may face loss of registration with the U.S. Securities and Exchange Commission, delisting from the stock exchange and legal consequences. If the stipulated submission period has passed, but a non-timely 10-K financial report (Non-Timely / NT 10-K) deemed reasonable by the SEC is submitted within the next fifteen days, the financial report submission obligation for that time period can be deemed to have been completed; If you fail to provide untimely 10-K financial reports, you may face loss of registration with the U.S. Securities and Exchange Commission, delisting from the stock exchange and legal consequences. Delay in submitting 8-K financial reports. Some stock exchanges, such as the New York Stock Exchange or Nasdaq, will require the company to issue a press release stating that it has failed to submit 8-K financial reports in a timely manner. This may cause negative sentiment among investors, believing that the company is mismanaged or deliberately hides change information; Delayed submission may cause the US Securities and Exchange Commission to initiate administrative proceedings against the company, and the most serious penalty may be the company's revocation of listing qualifications. financial reporting role Help investors understand the company's financial performance in the quarter of the financial year, thereby analyzing the company's operations, operating profitability, etc. Investors can use the 10-K financial report to understand the company's most complete and accurate financial situation, operating capabilities, etc. during the financial year. Help investors understand the company's sudden changes more efficiently and fairly. The mandatory disclosure of information on changes in operating conditions can effectively avoid the occurrence of insider trading. How to find financial reports of listed companies? Step 1: When investors need to view the financial reports of different companies, they can search for "edgar" on Google and find "Edgar - SEC.gov" in the search results to enter the SEC official website. Or enter http://www.sec.gov/edgar.shtml directly in the address bar to directly enter the information form page. Step 2: Find the "Company Filings Search" menu in the left menu bar of the U.S. Securities and Exchange Commission home page, click to enter, and you will come to the company search page. Step 3: In the search bar in the middle of the page, you can search for the target company by entering the company name or stock code. Here we take searching for Walmart as an example: Step 4: Enter the link of the target company to enter its information form page: Step 5: The information form page contains all the financial reports that the company needs to submit. When a specific financial report is required, you can enter 10–K in the quick search bar above to quickly filter the 10–K form, and enter the year to view the financial reports submitted by the company in the specified year: Step 6: Click the "10-K" link for the desired year to enter the link page for various documents. Click "FORM 10-K" at the top to view the 10-K form for that year: What does a 10-K financial report include?
As the company's most important financial report, Form 10-K summarizes the changes in the company's finances throughout the financial year, and is an audited figure with a high degree of credibility and accuracy. In addition to business conditions, Form 10-K will also record in detail the company's analysis, discussion, and discussion of risk factors during the financial year. It is the most important company financial report for investors. The 10-K financial report mainly consists of four parts, including fifteen sub-projects. Take Apple’s latest 10–K financial report as an example: Source: SEC Part I It mainly outlines the company's operating profile, product and/service content, etc. in the previous financial year. It also lists the risk factors related to the company's business that may arise in the company's current and future operations. At the end of Part One, Form 10-K lists the property held by the company and the legal cases currently pending against the company's property. The content of Part I is as follows (taking AAPL as an example): Item 1. Business Item 1A. Risk Factors Item 1B. Unresolved Staff Comments Item 2. Properties Item 3. Legal Proceedings Item 4. Mine Safety Disclosures Part II Part II is the most important part of Form 10-K. This section discloses all audited financial data that need to be reported to the public, including the current number of shares outstanding, multiple financial data statements including the consolidated operating statement, income statement, balance sheet, shareholder equity statement, cash flow statement, etc. At the same time, it will also disclose the management’s discussion and analysis of the company’s financial status and operating results in the past financial year, as well as quantitative and qualitative information on market risks. In addition, this part also includes the company’s information disclosure on supervision and supervision. Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Item 6. [Reserved] Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Item 7A. Quantitative and Qualitative Disclosures About Market Risk Item 8. Financial Statements and Supplementary Data Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Item 9A. Controls and Procedures Item 9B. Other Information Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Part III Part III mainly discloses relevant information about the company's management and board of directors, including their personal background information, work experience, salary situation, number of shares in the company (if any), etc. At the same time, it also provides the qualifications, salary, etc. of the main accounting personnel employed by the company to make the company's internal operating staffing more transparent.
Item 10. Directors, Executive Officers and Corporate Governance Item 11. Executive Compensation Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Item 13. Certain Relationships and Related Transactions, and Director Independence Item 14. Principal Accountant Fees and Services Part IV The last part mainly includes "Exhibition, Financial Statement Schedule", including references and links to important financial information contained in the document, copies of the company's articles of association, important contracts, and management's statement that the data disclosed in Form 10-K is true and valid. In addition, just like Apple, you can also add additional information that the company believes needs to be disclosed to the public in this section, such as "Summary of Form 10-K", etc., to make the financial data more complete and transparent. Item 15. Exhibit and Financial Statement Schedules Item 16. Form 10-K Summary How to read the 10-K financial report? 10-K financial reports are usually very comprehensive. When judging the company's investment value, you can focus on Item 1, Item 7 and Item 8. Below we introduce the 10-K financial report item by item: Item 1: Business Mainly describe the company's business, including its main products and services, current subsidiaries, and markets in which it operates. It may also include information about recent events at the company, the competition the company faces, regulations applicable to workforce issues, and special operating costs or seasonality. Investors can quickly understand the company’s background, its products and services. For example, in AAPL’s Form 10-K, some of the contents of Item 1 are as follows: The Company designs, manufactures and markets smartphones, personal computers, tablets, wearables and accessories, and sells a variety of related services. The Company’s fiscal year is the 52- or 53-week period that ends on the last Saturday of September. Item 1A: Risk Factors This section primarily contains information about the most significant risks applicable to the development of the company or the trading of its securities. Companies often list different risk factors in order of importance. In actual use, the information content is mainly focused on the risk itself, rather than the company's approach or plan to deal with the risk. Risk types include risks from the entire economic environment, risks from the company's internal operations, or potential risks from individual parts. For example, in AAPL's Form 10-K, some of the contents of Item 1A are as follows:
“The Company’s business, results of operations and financial condition, as well as the price of the Company’s stock, have been adversely affected and could in the future be materially adversely affected by the COVID-19 pandemic.” Item 1B: Unresolved Staff Comments This section requires the company to explain certain comments it received from SEC staff on previously filed reports, primarily comments that have not been addressed or answered after an extended period of time. Investors can check this section to see if the company has any remaining questions or issues raised by the Securities and Exchange Commission that have not yet been resolved. In item 1B, a company marked "None" is usually a company with relatively good operating conditions. The financial reports they provide usually have no problems, or once they receive questions from the US Securities and Exchange Commission, they can quickly provide answers to ensure the accuracy of the financial reports. Item 2: Properties This part mainly states information related to the company, such as where the company's headquarters is located, the main factories and mines it owns, and the basic situation. For example, in AAPL's Form 10-K, the content of Item 2 is as follows: The Company’s headquarters are located in Cupertino, California. As of September 25, 2021, the Company owned or leased facilities and land for corporate functions, R&D, data centers, retail and other purposes at locations throughout the U.S. and in various places outside the U.S. The Company believes its existing facilities and equipment, which are used by all reportable segments, are in good operating condition and are suitable for the conduct of its business. Item 3: Legal Proceedings This section discloses information about material litigation or other litigation that the company has not yet resolved, other than ordinary litigation. For example, in the newly released AAPL10-K financial report in September 2021, Item 3 lists a lawsuit against Apple:
Epic Games, Inc. (“Epic”) filed a lawsuit in the U.S. District Court for the Northern District of California (the “Northern California District Court”) against the Company alleging violations of federal and state antitrust laws and California’s unfair competition law based upon the Company’s operation of its App Store. The Company filed a counterclaim for breach of contract. On September 10, 2021, the Northern California District Court ruled in favor of the Company with respect to nine out of the ten counts included in Epic’s claim, and in favor of the Company with respect to the Company’s claims for breach of contract. The Northern California District Court found that certain provisions of the Company’s App Store Review Guidelines violated California’s unfair competition law and issued an injunction. Epic appealed the decision. The Company filed a cross-appeal and is seeking a stay of the injunction pending appeal. Item 4: Mine Safety Disclosure If the company's business involves mines, it needs to disclose in this section whether the company has strictly complied with the Mine Act related to mine safety. Item 5: “Common shares registered, relevant shareholder information and share repurchases” This section discloses information about the equity securities offered by the company, including market information, the number of share holders, dividends, the company's repurchases of stock, and the market performance of the company's stock. For example, for AAPL, Item 5 shows the number of shareholders of Apple: As of October 15, 2021, there were 23,502 shareholders of record. At the same time, Item 5 shows the specific situation of Apple’s stock repurchase: Item 6: Reserved This part is reserved and generally not used. Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations (Management’s Discussion and Analysis of Financial Condition and Results of Operations)
Item 7, referred to as MD&A, mainly discloses the company's management's views on the operating results of the previous fiscal year. You can understand the company's business development history and profitability through the company's analysis and comments on past performance. In Item 7A, you can obtain a more complete qualitative and quantitative analysis of risks. Based on this, combined with an overview of the company's past and future risks, you can make a preliminary judgment on the company's investment value. This section often includes: The company's operating and financial performance in the past fiscal year, including information about the company's liquidity and capital, trends or uncertainties that may have a significant impact on the company's performance, and also a discussion of management's views on key business risks and the measures taken to address these risks; significant changes in the Company's performance compared with the prior fiscal year period; Important accounting judgments, such as estimates and assumptions about future financial conditions, which when compared with changes in previous years, can have a significant impact on the numbers in the financial statements, such as assets, costs and net income. For example, for Apple's 10-K financial report, part of Item 7 is as follows: Total net sales increased 33% or $91.3 billion during 2021 compared to 2020, driven by growth in all Products and Services categories. Year-over-year net sales during 2021 also grew in each of the Company’s reportable segments. In April 2021, the Company announced an increase to its current share repurchase program authorization from $225 billion to $315 billion and raised its quarterly dividend from $0.205 to $0.22 per share beginning in May 2021. During 2021, the Company repurchased $85.5 billion of its common stock and paid dividends and dividend equivalents of $14.5 billion. This section also details the sales of Apple products and services: And the sales of Apple products in various states or countries around the world: Item 7A: Quantitative and Qualitative Disclosure About Market Risk In this section, listed companies will disclose information about the market risks they face, such as interest rate risk, foreign exchange risk, commodity price risk or stock price risk. For example, Apple listed the risks of U.S. interest changes and foreign exchange changes in Item 7A of its September 2021 10-K financial report. Item 8: Financial Statements and Supplementary Data
Item 8 can be said to be the most important part of this 10-K financial report, providing multiple audited financial statements, including the company's income statement (also known as the income statement or operating statement), balance sheet, cash flow statement, and shareholder equity statement, etc. And visually check the comparison with the financial data of the past one or two years in the report, and use the data to calculate the company's profitability ratios, such as return on assets, return on equity, return on capital, etc., to evaluate the company's investment value from more dimensions. All financial statements provided in a 10-K must be presented in accordance with a set of accounting principles, practices and rules known as Generally Accepted Accounting Principles (GAAP). For most audit reports, auditors will mark "Unqualified Opinion" to indicate that the financial statements fairly reflect the company's financial position in accordance with generally accepted accounting principles. However, if the auditor marks a "qualified opinion" (Qualified Opinion) or "Disclaimer of Opinion" (Disclaimer of Opinion), investors should carefully review the reasons. After reviewing these financial statements, investors should find attached a statement signed by the company's CEO and CFO certifying that the Form 10-K is accurate and complete. In addition to the above information, in some companies, investors may also find "non-GAAP financial measures", which means that these numbers do not comply with generally accepted accounting principles. When companies provide these data, they must indicate how their general accepted accounting principles are different, and investors need to weigh the weight of the company's financial measures as measured by non-GAAP accounting principles. The following is the income statement from Apple's Form 10-K released in September 2021. The income statement shows the profit or loss of a listed company, including gross profit, operating profit, net profit and other important information about the company's operations. It is an important source of data for analyzing the company's profitability. Below is the balance sheet of Apple's Form 10-K released in September 2021. The balance sheet shows the assets, liabilities, and shareholders’ equity of a listed company at a certain point in time. The following is the cash flow statement from Apple's Form 10-K released in September 2021. The cash flow statement shows the specific cash inflows and expenditures of a listed company. The following is Apple's shareholder equity statement on Form 10-K published in September 2021. The statement of stockholders' equity shows the changes in stockholders' equity during the year. Item 9: Changes in and Disagreements with Accountants on Accounting and Financial Disclosure (Changes in accounting and financial disclosure and disagreements with accountants) Item 9 mainly discloses information about the company’s change of accountants and any disagreements between the company and its accountants. Because usually, accountants use the most fair standards to audit and prepare financial statements. Therefore, if there is too much content in this part, it means that there are many differences between the company and the accountants, which usually means a decrease in the accuracy of the financial report, which is a bad signal. Item 9A: Controls and Procedures Item 9A mainly discloses the company’s process of collecting and reporting financial report information. Item 9B: Other Information Item 9B is generally used to disclose information that should be disclosed on Form 8-K during the fourth quarter of the fiscal year but has not yet been disclosed.
Item 9C: Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Item 9C is generally used to disclose situations where foreign jurisdictions impede the review of financial statements. For most companies, this item is not applicable. Item 10: Directors, Executives and Corporate Governance (Directors, Executives and Corporate Governance) Item 10 discloses information about the background and experience of the company’s directors and executive officers, the company’s code of ethics, and certain qualifications of directors and board committees. Although the 10-K requires these disclosures, most companies satisfy this requirement by providing the relevant information in a separate document called a proxy statement, which the company provides to its shareholders at the annual meeting. If the information is provided by a proxy statement, the 10-K will include a statement by the company that it is incorporating the information in the proxy statement by reference. Item 11: Executive Compensation Item 100 details the company's compensation policies and plans, as well as the amount of compensation paid to the company's senior executives over the past year. A company may also satisfy this requirement by providing relevant information in a separate document called a proxy statement, which it provides to its shareholders at its annual meeting. Item 12: Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Item 12 discloses information about shares held by a company's directors, officers and certain major shareholders and shares covered by equity compensation plans. Item 13: Certain Relationships and Related Transactions, and Director Independence (Certain Relationships and Related Transactions, and Director Independence) Item 13 discloses information about the relationships and transactions between a company and its directors, officers and their family members. It also provides information about whether each director of the company is independent. Item 14: Principal Accountant Fees and Services Item 14 discloses the various service fees paid by the company to the accounting firm. Item 15: Exhibits, Financial Statement Schedules (Attachments, Financial Statement Schedules) Item 15 provides a list of schedules and attachments for various financial statements, such as schedules for some of the financial statements in Item 8, company articles of association, copies of material contracts, a list of subsidiaries owned by the company, and other related documents. What is the difference between an annual report and a 10-K financial report? The annual report, also known as Annual Report in English, is a promotional publication produced by the company, such as a brochure, etc. The expression uses more graphics, photos and other visual forms to provide a more user-friendly reading experience compared to the 10-K form.
In the annual report, there is usually a brief description of the company's development history, which may be accompanied by a letter from the chairman, and then a table of the company's operating data for the previous fiscal year, and a statement from an independent accountant or auditor to express the authenticity and reliability of the data table. There is no strict time limit for the production of the annual report. It is usually completed before the annual shareholders' meeting or the board of directors. After the annual report is completed, it is handed over directly to directors, investors and customers. Therefore, compared with the 10-K form, the annual report has more functions to highlight and promote the company's advantages. Annual ReportAnnual Report10–K Financial Report10–K Report According to the company's own arrangements, provide company information including a company history review, operating overview of the last fiscal year, and some important financial data tables. Provide detailed content based on the standard Form 10-K content distribution. Will use photos, graphics and other richer visual description methods Usually expressed using only statements, numbers and tables It is a publication prepared by the company for customers and investors, with the company's yearbook as its main content. Information and data reports provided to investors and analysts Annual reports are only available on the company website 10-K financial reports can be obtained on the SEC official website, and can also be obtained on the financial portal websites of some companies. Prepared and distributed to shareholders or customers every year before the shareholders' meeting or board of directors Submissions must be made to the SEO Office within 60 to 90 days after the end of the financial year, depending on the size of the company. More company valuations What are minority interests? How to handle the profits of subsidiaries? What is Shareholders’ Equity? Shareholders’ Equity What is the Price to Cash Ratio (P/CF)? How to calculate? What is Operating Expense OpEx? Operating Expenses What is Cost of Goods Sold (COGS)? How to calculate? What is company profit? Gross profit, operating profit, net profit What is enterprise value multiple? Enterprise Multiple What are preferred shares? Preferred Stock What is operating leverage? Degree of Operating Leverage What is debt service ratio? Debt Service Coverage Ratio