10-K Checklist

CHECKLIST FOR ANALYZING AN ANNUAL REPORT OR A 10-K REPORT

1. What does the business do and how does the business make money 

2. What are the segments and which segment is the strongest?
3. How does the company grow:  Capital expenditures and acquisitions, or keep adding money to the savings account?

4. What is the MOAT that the business has that gives it an edge over its competitors.

5. 3 Cs:
(i) Customers:
(ii) Cost structure
(iii) Competitors: 

6. The selling process – How does the company sell its products? Directly to its customers or through some third party.

7. Pricing power: Does the company have pricing power.Can the company pass on the increase in raw material prices to consumers?

8. How much does the company spend on R&D?

9. How much leveraged is the business using? Operational and financial. 

10. What’s the impact of govt regulations in the business and what’s the risk involved here.

11. Is the business dependent on any government grants or subsidies?

12. Is it a Commodity business? If yes then what’s the volatility in the commodity prices.

13. Are there any long term contracts involved while selling the product ?

14. Is Operating Cash Flow tracking Operating Income?

15. What’s the risk involved with any quality issues? Recalls and warranties?

16. How easily are the products replaceable by other types of products? 

17. What’s the breakdown of business between international and USA operations and the impact of foreign currency on earnings?

18. Is the workforce of the company Unionized? 

19. Is the business dependent on any proprietary technology and are patents expiring soon?

20. Deferred taxes-DTA or DTP? If DTA, how sustainable?

21. Does the balance sheet have large amounts of goodwill and intangible assets.

22. Details of any legal issues company is facing.

23. Pension obligations.

24. Management stability and management type. Did they start within the company and how often has the senior leadership and the board structure changed for the company in the past five years.

25. Intricacies of the Financial statements and Footnotes-Separate analysis.