How to read a 10-K

A 10-K is the annual report every US public company files with the SEC. It's the single most comprehensive document a company produces about itself in a given year — audited, legally scrutinized, and hundreds of pages long. Unlike the quarterly 10-Q, the 10-K is where the full story lives: the business description, every material risk, the audited financials, and the auditor's formal opinion. Learning the shape of a 10-K once pays off for a career of investing.

The four-part structure

Every 10-K is organized into four parts, each with numbered items. The order and numbering are SEC-mandated — every 10-K you read will have the same items in the same places.

• Part I — what the business is, what could go wrong, properties, legal proceedings.
• Part II — the financials: stock info, MD&A, the statements, auditor opinion, controls.
• Part III — directors, executive pay, ownership, related parties (often by reference to the proxy).
• Part IV — exhibits and signatures.

Parts I and II are where you'll spend 95% of your time.

Part I, Item 1 — Business

A narrative description of what the company does, its segments, competitive landscape, supply chain, seasonality, and regulatory environment. On a first read of a new company, this is where you start — it's the only place the company writes out, in one place, what business it actually is in. Watch for:

• Segment definitions. How does the company split itself internally? The segments in Item 1 should match the segment numbers in the financial statement notes.
• Customer concentration. If one customer is >10% of revenue, it has to be disclosed.
• Intellectual property. Patents, trademarks, and licenses the company considers material.

Part I, Item 1A — Risk Factors

The long list of "things that could hurt us." Most companies copy 80% of their risk factors forward year-over-year, so the useful technique is to diff Item 1A against the prior year's 10-K. New risks, removed risks, or risks that got rewritten are where the signal lives.

Part I, Item 1B — Unresolved Staff Comments

The SEC sometimes sends comment letters asking clarifying questions about prior filings. If there are any unresolved ones more than 180 days old, they land here. Usually blank. When not blank, read carefully — the SEC is flagging an accounting or disclosure question the company hasn't yet resolved.

Part I, Item 2 — Properties

Real estate — owned and leased facilities. Mostly a table. Useful for industrial, retail, and REIT companies; skim for everyone else.

Part I, Item 3 — Legal Proceedings

Material lawsuits. Companies describe the plaintiff, the nature of the claim, where it stands, and — if estimable — the reserve they've booked. A new material suit shows up here before it hits the news.

Part I, Item 4 — Mine Safety Disclosures

Only relevant if the company operates mines. Skip otherwise.

Part II, Item 5 — Market for Registrant's Common Equity

Number of holders of record, dividend history, stock performance chart, and issuer purchases of equity securities — the monthly buyback table. The buyback table is the gold: it shows shares repurchased each month, average price paid, and remaining authorization.

Part II, Item 6 — [Reserved]

Used to be "Selected Financial Data" but the SEC removed it in 2021. Skip.

Part II, Item 7 — Management's Discussion and Analysis (MD&A)

The single most important section of a 10-K. This is management's written narrative of the year — why revenue moved, what happened to margins, what the cash flow picture looks like, what they're watching going forward. Read all of it. Look for:

• Year-over-year comparisons by revenue line and expense line.
• Language shifts vs. last year's 10-K. "Strong demand" in 2024 and "mixed demand" in 2025 is a real signal.
• Forward-looking statements. MD&A is the safe harbor section where companies give guidance and explain assumptions.
• Non-GAAP reconciliations. If management talks about "adjusted EBITDA" or "free cash flow excluding X," the reconciliation table is in MD&A.
• Critical accounting estimates. Where is management applying judgment (reserves, impairments, revenue recognition)? Small changes in these estimates move reported earnings.

Part II, Item 7A — Quantitative and Qualitative Disclosures About Market Risk

Interest rate, FX, and commodity exposure. Sensitivity tables show how much a 1% rate move or 10% FX move would hit earnings or equity. Important for banks, insurers, and multinationals; skim for everyone else.

Part II, Item 8 — Financial Statements and Supplementary Data

The audited financial statements: income statement, balance sheet, cash flow statement, statement of stockholders' equity, and the full set of footnotes. Read the footnotes in this order:

1. Summary of significant accounting policies (Note 1) — look for changes since last year.
2. Revenue — how is revenue recognized? Any deferred revenue balance changes?
3. Segments — revenue and operating income by segment, geography, and major customer.
4. Debt — maturity schedule, covenants, interest rates, revolver capacity.
5. Commitments and contingencies — operating leases, purchase obligations, litigation reserves.
6. Subsequent events — anything material between year-end and filing.

The auditor's report sits at the top of Item 8. A clean opinion is one paragraph. Anything longer — a going-concern qualification, a material weakness, an adverse opinion — is a serious signal.

Part II, Item 9 — Changes in and Disagreements with Accountants

If there's a disagreement serious enough to disclose, the company changed auditors in controversy. Very rare; very serious when present.

Part II, Item 9A — Controls and Procedures

Management's assertion on internal control over financial reporting (ICFR), plus the auditor's attestation on ICFR for accelerated filers. A disclosed material weakness is a red flag.

Part II, Item 9B — Other Information

Catchall for anything disclosed for the first time in the 10-K that should have been in an 8-K. Usually empty.

Part III — Directors, Executive Compensation, Beneficial Ownership

Items 10–14. Almost always incorporated by reference from the company's proxy statement (Form DEF 14A) filed within 120 days of year-end. If you want executive pay detail, open the proxy.

Part IV — Exhibits and Signatures

Item 15 lists every exhibit: material contracts, credit agreements, by-laws, subsidiaries, CEO/CFO certifications (Sarbanes-Oxley). Exhibits are where you find the actual text of debt agreements and employment contracts.

The 20-minute skim

When you have 20 minutes with a new company's 10-K:

1. Item 1 — Business. Read it all.
2. Item 1A — Risk Factors. Diff against prior year; read new or changed risks.
3. Item 7 — MD&A. Read it all.
4. Item 8 — Auditor's opinion (one paragraph) and the segment footnote.
5. Item 5 — Buyback table, if you care about capital allocation.

By the end you'll have a working mental model of the business, the risks management chose to disclose, last year's performance in management's own words, and the audit integrity picture.

How Portolio helps

Every 10-K on Portolio ships with a Smart Summary that walks you through Item 1, Item 1A (diffed against the prior year when we can), and Item 7. The summary pulls the numbers that moved, the tone-shift language in MD&A, and any new risks. Click through to the source filing for the full document — the full 10-K is one click away on every accession page, and the summary deep-links to the exact section you're reading.