Reading 10-K / 10-Q

What This Skill Does

This is how to read an SEC filing efficiently and extract the information that matters for research. A 10-K can be 200+ pages; 80% of the signal is in 20% of the sections. Knowing which sections, what to look for, and what the patterns reveal is the difference between useful research and wasted time. 10-Q (quarterly) is shorter but contains fresher data; 10-K (annual) is comprehensive but can be 12 months stale on forward-looking context.

Filings are accessed via SEC EDGAR (free, primary source) or via brokerage platforms (convenient but sometimes lagging). Always verify claims against EDGAR for anything material.

What's in a 10-K (in reading order of importance)

Must-read sections (80% of the value)

Item 1 — Business: Where the company describes what they do, who customers are, competitive landscape, employees, seasonality. Read this first every year even if you know the company — changes year-over-year reveal strategic shifts.

Item 1A — Risk Factors: Everything that could go wrong, in the company's own words. Read every year — new risks appearing signal concerns; risks being removed signal resolution (rare) or deflection. Ignore the boilerplate ("our stock price may be volatile"); focus on the company-specific ones.

Item 7 — MD&A (Management Discussion & Analysis): Management's narrative on the financials. How management explains variance, what they highlight, what they gloss over. Compare MD&A year-over-year: does the story change? Are metrics emphasized this year that weren't last?

Item 8 — Financial Statements + Footnotes: The numbers + footnotes. Footnotes are where the real information is — accounting policies, segment disclosures, deferred revenue, commitments, contingencies, subsequent events, revenue recognition policy specifics. Spend 2–3× time on footnotes vs the primary statements.