10-K vs 10-Q: How to Read a Company's Annual and Quarterly Reports

The 10-K is the audited annual report; the 10-Q is the unaudited quarterly update. Learn what each contains, when they are due, and which sections are worth your time.

Public companies in the US file two recurring reports that every investor eventually has to read: the 10-K (annual) and the 10-Q (quarterly). They look intimidating because they are long. Most of the value sits in a handful of sections.

The short version

There is no 10-Q for the fourth quarter. The 10-K covers it.

When they are due

Deadlines depend on the size of the company's public float:

• 10-K: 60 days after fiscal year end for large accelerated filers, 75 days for accelerated filers, 90 days for everyone else.
• 10-Q: 40 days after quarter end for large accelerated and accelerated filers, 45 days for the rest.

So for a company with a December year end, the annual report typically lands between late February and the end of March.

The 10-K: where to spend your time

1. Item 1A, Risk factors. Often boilerplate, but compare year to year. A new risk factor is information.
2. Item 7, Management's discussion and analysis (MD&A). Management explains the numbers in words: what drove revenue, margins and cash flow, and what they expect.
3. Item 8, Financial statements and notes. The income statement, balance sheet and cash flow statement, plus the notes. The notes are where revenue recognition, debt terms, leases and contingent liabilities hide.
4. Item 9A, Controls and procedures. A reported material weakness is a red flag worth following up.
5. Item 3, Legal proceedings.

The 10-Q: what to look for

A 10-Q is mostly the same statements, unaudited, for the quarter and year to date, with a shorter MD&A. Read it for changes: a new line of credit, a restated number, a change in the risk factors, a new legal proceeding, a stock buyback or a change in share count.

A practical reading order

1. Start with the cash flow statement. Does operating cash flow roughly follow net income? Large gaps need an explanation.
2. Read the MD&A for the story behind the change in revenue and margin.
3. Check the balance sheet for debt, cash and the next maturities.
4. Open the notes on anything that looks odd.
5. Skim the risk factors for what is new.

Where these fit with other filings

The 10-K and 10-Q are periodic. Between them, news arrives through Form 8-K, and ownership changes through Form 4 and Schedule 13D/G. For a full workflow, see how to research a stock with public filings.

Educational content only. Not investment advice.

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