The Complete Guide to Reading a 10-K Annual Report
Learn how to read a 10-K filing like a professional investor. We break down every section and show you what actually matters.
The 10-K is the one filing you can’t afford to skim.
It’s the annual report every U.S. public company files with the SEC: audited financials, business description, risk factors, and management’s own narrative of what happened and what might happen next. If you want to understand a business beyond headlines and slide decks, you start here.
The problem: 10-Ks are long, dense, and written in legalese. Apple’s 10-K runs dozens of pages. Some financials and conglomerates push past a hundred. If you try to read them front to back, you’ll burn out fast.
This guide is about reading a 10-K like a professional investor: where to start, what to ignore, what to read carefully, and how to spot red flags. By the end, you should be able to pick up any 10-K and pull out the 20% that matters most.
How Professionals Actually Read a 10-K
Most pros don’t read 10-Ks in order. They read them in priority order:
- Scan Risk Factors and MD&A to understand what changed and what management is worried about.
- Drop into the financial statements and cash flow to see if the numbers support the story.
- Check related party transactions and controls for governance issues.
- Compare to last year’s 10-K: changed risks, new footnotes, and major shifts in wording.
Think of the 10-K as a map, not a novel. You’re allowed to jump around.
What Is a 10-K?
A 10-K is the legally required annual report that U.S. public companies file with the Securities and Exchange Commission (SEC). Unlike glossy annual reports, the 10-K is tightly regulated: there are rules about what must be disclosed and how.
A few core facts:
- It’s filed once per year, usually 60–90 days after fiscal year end, depending on company size.
- The financial statements are audited by an independent accounting firm.
- Companies must disclose material risks and significant legal or regulatory issues.
- Forward-looking statements are included but wrapped in legal safe-harbor language.
- Every 10-K is available for free on SEC EDGAR and via tools like Earnings Feed.
The 10-K is where companies have the least room to spin. Marketing can be optimistic; this document has legal consequences.
The Structure of a 10-K (Anatomy)
Every 10-K follows the same basic layout. Once you know the structure, you can navigate any filing quickly.
Part I – The Business and Its Risks
| Item | What It Covers | Why It Matters |
|---|---|---|
| Item 1 – Business | What the company does, products/services, markets | Business model and how it actually makes money |
| Item 1A – Risk Factors | Things that could materially hurt the business | What management is willing to admit can go wrong |
| Item 1B – Unresolved Staff Comments | Ongoing SEC issues | Persistent comments can be a yellow flag |
| Item 1C – Cybersecurity | Governance and incidents | Increasingly important for tech and critical infrastructure |
| Item 2 – Properties | Real estate and facilities | Useful for asset-heavy or retail companies |
| Item 3 – Legal Proceedings | Lawsuits, investigations, regulatory actions | Potential liabilities and distractions |
| Item 4 – Mine Safety Disclosures | Mining-specific compliance | Relevant only for resource companies |
Part II – Financial Performance
| Item | What It Covers | Why It Matters |
|---|---|---|
| Item 5 – Market for Common Equity | Stock info, dividends, buybacks | Capital return policy and shareholder base |
| Item 6 – [Reserved] | Previously selected data | Now generally empty under updated rules |
| Item 7 – MD&A | Management’s Discussion & Analysis | The story behind the numbers |
| Item 7A – Market Risk | Interest rate, FX, commodity risk | How macro shocks might hit earnings |
| Item 8 – Financial Statements and Notes | Income statement, balance sheet, cash flow, footnotes | The audited numbers and all the details |
| Item 9 – Changes in Accountants | Auditor changes and disputes | Big red flag territory if substantive |
| Item 9A – Controls and Procedures | Internal controls over financial reporting | Where “material weakness” language shows up |
Part III – People and Governance
Some of Part III is sometimes incorporated from the proxy statement (DEF 14A).
| Item | What It Covers | Why It Matters |
|---|---|---|
| Item 10 – Directors, Executive Officers and Governance | Who runs the company and how it’s governed | Board quality and management background |
| Item 11 – Executive Compensation | How leadership is paid | Incentives and alignment with shareholders |
| Item 12 – Security Ownership | Who owns the stock | Insider and institutional ownership |
| Item 13 – Certain Relationships and Related Transactions | Deals with insiders | Conflicts of interest and self-dealing |
| Item 14 – Principal Accountant Fees | Audit and non-audit fees | Auditor dependence on the client |
Part IV – Exhibits
| Item | What It Covers | Why It Matters |
|---|---|---|
| Item 15 – Exhibits and Schedules | Contracts, credit agreements, certifications, etc. | The underlying agreements and supporting detail |
You do not need to read every part with equal intensity. The next section focuses on the areas that deliver the most insight per minute.
The Five Sections That Deserve Your Time
There are five parts of a 10-K that most investors should read for every name they care about. Everything else is optional and mostly situational.
1. Risk Factors (Item 1A)
Risk Factors is a long list of things that could materially harm the business or the stock.
Why it matters: companies are on the hook here. If they know about a material risk and fail to disclose it, they’re exposed legally. That makes Item 1A a surprisingly honest section—within the limits of legal drafting.
When you read Risk Factors, focus on changes and specificity, not the sheer length:
- Compare to last year. New risk factors often signal emerging trouble: new regulatory investigations, dependence on a single customer, rising input costs, and so on.
- Watch for specific disclosures. Generic lines about “competition,” “macroeconomic conditions,” or “we may not successfully execute our strategy” are boilerplate. A line about an ongoing DOJ investigation is not.
- Notice ordering and emphasis. Risks higher up, longer, or heavily detailed are rarely random. If something moves from the bottom of the list to the top, ask why.
- Look for numbers. Any risk that includes specific dollar amounts or percentages is worth a second read.
A useful habit: keep last year’s 10-K open next to the current one and diff the Risk Factors by eye. You’re looking more for what’s new than what’s already known.
2. Management’s Discussion and Analysis (Item 7)
MD&A is management’s explanation of the year in plain(ish) English: what happened in the business, why the numbers look the way they do, and what they think comes next.
This is the closest you get to sitting in a room with management while they walk through the year. It’s also where they frame “one-time” items, restructuring charges, and non-GAAP metrics.
Use MD&A to answer a few questions:
- What actually drove the numbers? Was revenue growth driven by volume, pricing, mix, acquisitions? Did margins expand because of cost cuts, or because of a one-off tailwind?
- How healthy is the cash generation? Good MD&A ties earnings to cash: why cash flow went up or down, what’s happening with working capital, how capex is trending.
- What’s management telling you about the future? Look for “we expect,” “we believe,” “we anticipate.” Note how specific they are and how that compares to prior years.
- How do their non-GAAP metrics work? Adjusted earnings are not evil by default, but you should understand what’s being adjusted out and whether those adjustments keep recurring.
Over time, you’ll notice tone shifts: optimistic language turning cautious, or vice versa. Those tone shifts often show up in MD&A before they’re obvious in the numbers.
3. Financial Statements and Notes (Item 8)
Item 8 is where the audited numbers live: income statement, balance sheet, cash flow statement, plus all the footnotes that explain how those numbers came to be.
A simple workflow:
Start with the cash flow statement.
If net income is rising but operating cash flow is flat or falling, you already have a question to answer.Scan the income statement.
Look at trends over the three years shown: revenue, gross margin, operating margin, net income, and EPS. You’re trying to understand the basic shape of the business.Check the balance sheet for leverage and composition.
How much debt is there, when does it mature, and how does that compare to cash on hand? How large is goodwill relative to equity?Read key footnotes.
Revenue recognition, segment information, stock-based compensation, leases, pension obligations, and commitments/contingencies are all note sections that can change how you interpret the headline numbers.
One simple rule: if cash flow and earnings are moving in opposite directions without a very good explanation, slow down and dig into the notes.
4. Business Description (Item 1)
The Business section explains what the company actually does. That sounds basic, but the level of detail here is much better than in marketing or press releases.
You’re looking to answer:
- How does this company make money—by selling products, services, subscriptions, licenses, ads, something else?
- How is the business segmented, and which segments are growing or shrinking?
- How concentrated is the customer base? Losing one or two big customers could be fatal in some industries.
- What does the competitive landscape look like? Are we talking commodity competition, network effects, heavy regulation?
If you can’t explain the business model clearly after reading Item 1, you’re not ready to make a serious judgment about the stock. This is also the section that helps you decide whether this is a business you even want to spend more time on.
5. Related Party Transactions (Item 13)
Item 13 is dry but important. It’s where the company discloses transactions with insiders: executives, board members, or their related entities.
Most of the time, there’s nothing dramatic here. Occasionally, it’s where you find the seeds of a governance blow-up.
You’re watching for:
- The company leasing property from an entity controlled by an executive or director.
- “Consulting” or service arrangements where insiders’ firms get paid.
- Loans, guarantees, or unusual compensation arrangements that don’t align with shareholders.
- The size of these transactions relative to company size. A small, disclosed office lease isn’t the same as a CEO-controlled entity receiving a huge percentage of company spend.
Not every related party transaction is bad. But undisclosed or unusual ones have been at the center of many accounting scandals. When this section feels long, complex, or vaguely worded, it’s a good reason to spend more time here.
Reading a 10-K Efficiently
You don’t need to block out a full day for every 10-K. A practical pattern:
Pass 1: Fast Scan (15–20 Minutes)
- Open the latest 10-K and the prior year’s 10-K side by side.
- Skim Risk Factors looking for newly added or heavily expanded risks.
- Read the MD&A overview and any sections explicitly titled “Overview” or “Outlook.”
- Jump to the cash flow statement and see whether operating cash flow is positive and roughly tracks net income.
If nothing seems worrying, you’ve already avoided spending an hour on a company that doesn’t deserve it.
Pass 2: Deep Dive (60–90 Minutes)
For companies you care about:
- Read Item 1 Business carefully until you can explain the model in your own words.
- Work through MD&A in full, including segment discussions and explanations of non-GAAP metrics.
- Study the three financial statements and a handful of key footnotes (revenue, segments, leases, contingencies).
- Revisit Risk Factors more slowly and note any that you think the market is underestimating.
- Check Item 13 Related Party Transactions and Item 9A Controls for governance and reporting risks.
This level of work is overkill for a watchlist of fifty names, but very reasonable for your actual positions.
Ongoing Monitoring
The 10-K is the big annual snapshot. Between 10-Ks, you use:
- 10-Qs (quarterly reports) for updates on the same story.
- 8-Ks for material events (mergers, executive changes, major contracts, etc.).
- Real-time tools like Earnings Feed to see these filings the moment they hit EDGAR.
Common 10-K Red Flags
A few patterns consistently deserve extra attention:
| Red Flag | Where It Shows Up | Why It Matters |
|---|---|---|
| Auditor changes or disputes | Item 9, related 8-Ks | Often tied to disagreements over accounting |
| “Material weakness” in controls | Item 9A | Signals problems in how financial data is produced |
| “Substantial doubt” about going concern | Auditor’s opinion in Item 8 | Auditor questioning the company’s ability to survive 12 months |
| Restated financials | Notes in Item 8, sometimes 8-Ks | Prior numbers were incorrect; can be serious |
| Heavy or unusual related party dealings | Item 13 | Conflicts of interest and potential self-dealing |
| New, specific risk factors | Item 1A | Fresh legal, regulatory, or financial risks |
| Rising earnings, falling cash flow | Cash flow vs income statement | Earnings quality questions and aggressive accounting risk |
| Receivables growing faster than revenue | Balance sheet, MD&A | Customers may not be paying on time |
| Large goodwill and intangibles vs equity | Balance sheet | Overpayment for acquisitions, potential impairments |
Any single item isn’t automatically fatal. Clusters of them are what should make you cautious.
10-K Deadlines: When Filings Show Up
10-K due dates depend on how large the company is (by public float – roughly, the market value of shares held by non-insiders):
| Filer Type | Public Float | 10-K Deadline After Fiscal Year End |
|---|---|---|
| Large Accelerated Filer | $700M+ | 60 days |
| Accelerated Filer | $75M–$700M | 75 days |
| Non-Accelerated Filer | Under $75M | 90 days |
Most well-known large caps are Large Accelerated Filers, so if they use a December year-end, their 10-K will typically show up in late February.
Knowing the deadline helps you plan your review calendar and notice late filings, which can themselves be a warning sign.
How to Find 10-Ks
You have three main options:
1. SEC EDGAR (Official Source)
EDGAR is the authoritative repository. Every 10-K, 10-Q, 8-K, and more is there.
You can search by company name or ticker here:
SEC EDGAR Company Search.
The downside: the interface is clunky, and you have to poll it manually or build your own tools to keep up with new filings.
2. Earnings Feed (Real-Time + Easier UX)
Earnings Feed sits on top of EDGAR but focuses on real-time tracking and usability:
- A live feed that shows new 10-Ks as they file.
- Company profiles that aggregate all filings in one place, along with basic stock and ownership info.
- Filtering by form type, exchange, industry, and more.
- A mobile-friendly interface that’s easy to check during the day.
It’s a simpler way to monitor and open 10-Ks quickly without paying for a full research terminal.
3. Company Investor Relations (IR) Sites
Most companies post their 10-Ks in an “SEC Filings” or “Financials” section on their IR site. This is convenient if you’re only looking at a single company, less useful if you’re tracking dozens.
Practice: Your First (or Next) 10-K
The only way to get comfortable with 10-Ks is repetition.
Pick a business you know from everyday life—maybe a retailer you shop at, a tech platform you use, or a brand you see everywhere. Then:
- Go to the Earnings Feed 10-K hub and pull up the latest 10-K for that company.
- Read Item 1 Business until you can explain the model to someone else in a few sentences.
- Read the MD&A overview and note the main drivers of the year: what went right and what went wrong.
- Scan Risk Factors for anything surprising, specific, or newly added.
- Check the cash flow statement and ask: are they turning accounting profits into cash?
- Write down three things you learned that you did not know from headlines or investor presentations.
Good starter names tend to be clear, consumer-facing businesses with understandable models (think big retailers, consumer brands, or subscription services).
Summary and Next Steps
The 10-K is where the real story of a public company lives. It’s dense, but it’s also the one document where management, lawyers, auditors, and regulators all meet. That makes it uniquely valuable.
To recap:
- You don’t need to read every line. Focus on Risk Factors, MD&A, the financials, the Business section, and related party disclosures.
- Always compare the current 10-K to prior years. Changes in language and emphasis often tell you more than the raw numbers.
- Use the cash flow statement and footnotes to test whether earnings are high quality.
- Watch for clusters of red flags: control weaknesses, restatements, strange related party dealings, and widening gaps between cash flow and earnings.
If you want to build the habit of actually reading 10-Ks when they file, it helps to have them pushed to you rather than hunting them down.
You can:
- Create a free watchlist on Earnings Feed and get 10-Ks for your names the moment they hit EDGAR.
- Browse all recent 10-Ks to see how different companies tell their story.
- When you’re ready to go beyond annuals, explore 10-Qs for quarter-to-quarter updates and Form 4 insider filings for what insiders are doing with their own shares.
The filings are free. The edge comes from actually reading them.