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Topics in Business: Company Research

Beginning company research: The 10-k and the 20-f


All publicly traded companies in the United States are required to file an annual statement, called a 10-k, with the US Securities and Exchange Commission. (Publicly traded companies in other countries have reporting requirements and governmental agencies of their own, which are not covered here.) The 10-k is a comprehensive, detailed report of a publicly traded company's business operations and financial condition. It's usually accompanied by additional statements: executive compensation, financial statements, and so forth. While publicly traded companies also file additional reports with the SEC (10-Qs or quarterly reports, for example), the 10-k is the most important for researchers.

Corporations based outside of the USA but selling shares on any US stock exchange are required to file a 20-f annual statement with the SEC. Similar in scope to the 10-k, its purpose is to standardize reporting for international companies.

By law, both the 10-k and the 20-f must be made available to shareholders. Companies usually comply with this requirement by posting the statements to their websites. You can also find 10-k and 20-f statements by searching the SEC's website search engine, EDGAR.

Reading the 10-k and 20-f

To learn as much about a company as possible, you should read the entire 10-k or 20-f, of course, including the attached supplemental documents. However, if you just need some background about the company in question, you can limit yourself to reading the following:

  • For the 10-k: Item 1 - Business, and Item 1a - Risk Factors.
    • You can find Item 1 and Item 1a by searching the table of contents of the 10-k. It looks like this:

    • Item 1 is a basic overview of the company's purpose, objectives, and business practices. It includes information like operating segments, products and brands, manufacturing locations in and outside the United States, and other information. Here's Item 1a from Coca-Cola's 10-k.

    • Item 1a - Risk Factors is a statement of threats to company operations, as seen by the company. These are usually general statements ("our company is vulnerable to fluctuations in the economy ..." for example), but if you read carefully, you can discern more pointed references to threats and vulnerabilities ("Obesity and other health-related concerns may reduce demand for some of our products ...").