Back to Basics, Part 1
Let's start with all these forms that we see mentioned around the financial
watercooler: 10-K, 8-K, 10-Q, WD-40. What exactly do all these numbers
and letters mean?
Well, WD-40 is a fine company that produces "Lava" soap and
"3-in-one oil," but seeing how it has little to do with financial
forms, we'll move on to the 10-K.
Like an annual report, the 10-K explains the company's business activities
for the most recent twelve-month operating period. The 10-K, which is
required to be filed with the Securities and Exchange Commission (SEC)
within 90 days of the company's fiscal year end, typically contains
more detail than an annual report, such as more thorough operating and
financial statistics, information on legal proceedings, and management
compensation. It is also presented in a less aesthetically pleasing
manner. Less pretty, more useful. The final pages of a 10-K contain
an index of exhibits that are required listings but are not included
in the actual report. These exhibits include form 8-K.
The 8-K is used to explain significant events or changes that affect
the company's financial condition. These events might include changes
in executive compensation, company bylaws, acquisitions, mergers, financing
agreements, and bankruptcy roceedings. The 8-K form is required to be
filed within 15 days of most material changes and is released to the
Finally, we have the 10-Q. Form 10-Q is a quarterly version of the
10-K; however, it is less detailed and generally unaudited. The SEC
requires publicly traded companies to file form 10-Q within 45 days
of the end of each quarter, except the final quarter, in which the 10-K
Contained within these three filings and the annual report is practically
everything you need to investigate and dissect any publicly traded company
in the U.S. Furthermore, each is easily obtainable by contacting the
company's shareholder services department, or more conveniently, right
here online at the Fool.
Next week we'll strap on our mining hats, swing a few picks, and begin
to break these reports up into manageable chunks. Nuggets of gold are
contained in them thar pages, they just need to be liberated.
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