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Publicly traded businesses or any U.S.-based registered companies are required to report comprehensive information about their overall performance and activities annually through form 10-K. The 10-K form contents and details are available in Section 13 of the Exchange Act set up in 1934. In this post, we explain the role of a 10-K form and how you can use this financial filing document as a gauge for performing due diligence on your company.
What is a 10K form?
The 10-K form is as important as the annual report or financial statement that accompanies it. It explains what a public company did in the previous year, what it expects to do in the current year, and what actions it may take in the future to meet financial obligations.
Companies rely on their shareholders to read the SEC 10-K form because it is the ultimate source of truth about their financial health. It is where the auditors obtain instructions to report material events that have occurred during the year.
It requires the agreement of both parties — investors and management — to include specific information in the report. The 10K form is the annual report of all publicly held companies in the U.S. It must be filed with the U.S. Securities and Exchange Commission (SEC) within 90 days after the fiscal year and contains financial statements and management discussion and analysis.
The 10k analysis provides investors with a detailed look at a company's performance over time, such as revenues, earnings per share (EPS), cash profit, and market share.
How to Read/Fill 10K forms?
Securities and Exchange Commission (SEC) 's continuous disclosure requirements aim at providing current, accurate, and timely information to the marketplace so investors can make informed investment decisions.
SEC achieves this by requiring companies to file their annual report on Form 10-K within 40 days after the end of its fiscal year. These reports are essential because they give an investor a range of information about a company, including the number of shares outstanding, financial statements, selected financial data for the last five years, recent changes in the company's management, risk factors of the business, etc.
Those unfamiliar with the annual 10-K filing from a company's annual report may feel a bit overwhelmed in reading a 10k. However, with practice, 10-K filings can become somewhat easier to read.
There are two versions of the 10-K. The first is that of a small business, which follows Form S-1. For larger companies having more than $75 million in assets, Form 1-A is applicable. Each version of the form has five sections that must be read carefully by investors and interested people.
The 10K form contains five distinct sections: business, risk factors, financial data, management's discussion and analysis (MD&A), and Financial statements and supplementary data. Filling out 10K forms is a stressful task- there is certainly an easier way. You can use a platform like Docsumo to help on how to read 10k and turn it into a time-saving method.
How to automate data extraction from Form 10K with Docsumo
With Docsumo, you can use form extraction to automatically extract data from the most critical sections of a 10K without manually entering or copying-paste anything. Has data extraction become a repetitive and time-consuming task? Do you want to use existing tools but haven't found one that fits your needs? Would you like to save dozens of hours and keep only the most valuable data in a complete structured database? Docsumo can help.
We provide easy-to-use, functional and robust software tools that you can use to extract SEC filing data. The software extracts every available balance sheet figure and income statement detail – automatically. The result is professional formatted financial statements in a fraction of the time and cost it would take you without Docsumo.
It isn't easy to manually download, upload, and edit fields data from the SEC 10-K documents. It can take hours to download/upload the files, manually review and make corrections in Excel before uploading them back into SEC's database to get extracted.
The manual process is prone to mistakes such as missed fields, duplicates and other data problems. Docsumo manages this entire process quickly and efficiently by automating it. Also, using Docsumo allows you to download a zip file with all 10-K documents daily rather than one document, which saves a lot of time.
Benefits of automated 10k form data extraction
There are numerous benefits of form 10K data extraction:
- Primarily, as an entrepreneur, you can decide whether or not a company is a worthwhile investment.
- Another use of the 10K form is for the company itself. Having a well-written document is advantageous for them as it helps increase their number of investors and potential consumers, giving them a higher level of popularity. It is vital for both parties that the 10K form be written and presented in a well-written manner.
- It offers investors an opportunity to acquire shares of a company even before it opens for trading and allows them to make purchase decisions with relative ease.
- It is beneficial for those who invest in small businesses, technology stocks, private companies, and any other entity where trading is not easily accessible or discretionary.
- An SEC 10-K also eliminates the need for forms three and four that require appropriate filing by the borrower, creditor, and officer/employee of the company.
- It's a collective insight that using automated SEC 10-K form data extraction solutions can improve your investment decisions because having access to this data increases transparency and reliability in the methods furnished.