In todayâ€™s world we research everything. Whether we are checking the reviews of a new restaurant or picking out our next phone, information is always at our fingertips. In fact, many people now insist on doing research for even the smallest of purchases. For value investors, the same should be true of our stock purchases; we must always do our homework. Thankfully, the internet has made it easier than ever to find all the information we need.
The US Government Securities and Exchange Commission (SEC) requires corporations to file a yearly 10-K form. This form includes information such as the company history, operations, products, profit, losses, and overall financial standing. For investors, the 10-K form is a wealth of information that can help establish the soundness of a company. The SEC makes this information available free of charge through their EDGAR database. Â This database also contains other information, such as the 10-Q form, which corporations are also required to file for the first three quarters of the fiscal year, with the 10-K being the last form of the year. The 10-Q form is less detailed then the 10-K and can give investors a brief up-to-date summary of the corporationâ€™s current standing.
For those interested, and willing, 10-K forms are a great way to get a complete understanding of a company from the products they carry, to their overall strategy. As seen below in a clip from Appleâ€™s 2013 10-K, investors are able to gain knowledge on the background of a company, even without any prior knowledge.
Even though the 10-K can be very beneficial to investors, when researching companies to buy, reading through an entire 10-K form can seem extremely daunting. This is why many companies, such as MSN Money,Â Yahoo Finance, orÂ Google Finance summarize the information found in the 10-K and 10-Q forms. Below is an example of Appleâ€™s 2013 Balance Sheet as found through MSN Money. Our recommendation is that you start with a summarized version of the data through MSN Money or another source. If the company appears right for a value investor, then go the SECâ€™s EDGAR database to learn more.
Would you like more detailed information on using these two sources? Check out our video!