If you own stock, chances are good your mailbox is a receptacle for a considerable amount of financial reports throughout the year. Granted, this data may not be the most scintillating literature, but since government regulators mandate public corporations and mutual funds provide updates to their shareholders, the least you can do is take a cursory look at this important literature before relegating it to the recycle bin.
Leading the list of these documents are annual reports, 10-Ks and 10-Qs, which can provide comprehensive information about the stock or mutual fund you have invested in, if you know what to look for.
Commonly referred to as a Form 10-K, this statement contains the company's income statement, its balance sheet and cash flow statement.
Be aware that while all public companies must adhere to generally accepted accounting principles, there is a lot of latitude about where they place their ''risk factors'' section within an annual report. This important section essentially addresses weaknesses within the company or the industry within which they do business. In plain language, this is where they are telling you what could go wrong. Since negative information is not what a company wants to share, you may have to dig deep to find this section - maybe even as deep as within an annual report's footnotes.
Another interesting document you should be aware of is the Form 10-Q. While companies are not required to mail 10-Qs to shareholders, they must be filed within 45 days after the end of a company's fiscal quarter and are typically posted on a company's Web site. The quarterly statements, like other SEC filings, can also be found at www.sec.gov. There's a lot of valuable data on a 10-Q, including earnings-per-share results and other interim information that is material to shareholders between year-end reports.
Cozying up to your investments' annual or quarterly reports a few times a year could be absorbing and profitable in the long run.
