You want to understand a company before you invest, lend, or partner with it. SEC filings give you that window. They contain the numbers, the risks, and the management commentary that annual reports often gloss over. But these documents run hundreds of pages. Where do you start? What should you prioritize? 

This guide walks you through the measures that matter most. You'll learn which forms to read, which sections to focus on, and which red flags to watch for. 

Why Should You Care About SEC Filings? 

SEC filings are not marketing materials. Companies must file them under penalty of law, which means the information is more reliable than press releases or investor presentations. 

These documents serve three purposes for your research: 

• Performance tracking. You see actual results, not projections. Revenue, margins, cash flow, and debt levels appear in standardized formats that let you compare across periods and across competitors. 

• Risk assessment. The risk section lists everything from supply chain dependencies to pending lawsuits. Management must disclose material risks, even when those risks make the company look vulnerable. 

• Leadership decisions. MD&A (Management's Discussion and Analysis) explains why numbers moved. You learn which business segments are growing, which are struggling, and what management plans to do next. The proxy statement shows you how executives get paid and whether their incentives align with long term performance. 

Where Should You Find These Filings? 

The SEC provides the official source through EDGAR at the main search page on sec.gov. 

You reach the latest documents with these steps. 

• Enter the company name or ticker in the search box. 

• Select the company in the results. 

• Review the list of filings in reverse chronological order. 

• Use the form type filter to focus on 10 K, 10 Q, 8 K, DEF 14A, or Forms 3, 4, and 5. 

You also see these filings on many investor relations pages, but the government source stays the most reliable. 

If you want faster access, cleaner sorting, and automatic alerts, you get the same filings through Global Filings. The platform organizes updates for you, highlights key forms, and delivers new disclosures without manual checks. 

Which Forms Should Matter Most to You? 

What Should You Look for in Form 10-K? 

The 10-K is the annual report. It typically runs 100 to 300 pages. Start with these sections: 

Item 1: Business. Describes what the company does, its products, its customers, and its competitive position. Read this first if you're new to the company. 

Item 1A: Risk Factors. Lists everything that could go wrong. Compare this year's risks to last year's to spot new concerns. 

Item 7: MD&A. Management explains why revenue rose or fell, why margins expanded or contracted, and what they expect ahead. This section connects the numbers to the business reality. 

Item 8: Financial Statements and Supplementary Data. Contains the balance sheet, income statement, cash flow statement, and footnotes. This is where you find the hard numbers. 

Item 9A: Controls and Procedures. Reveals whether the company's internal controls over financial reporting are working. Weaknesses here should raise immediate concerns. 

What Should You Scan in Form 10-Q? 

The 10-Q is the quarterly report. It's shorter than the 10-K, usually 40 to 80 pages. Focus on: 

Part I, Item 2: MD&A. Shows what changed in the past three months. Revenue trends, cost pressures, and liquidity updates appear here. 

Part I, Item 1: Financial Statements. Gives you updated balance sheet, income statement, and cash flow data. Compare these to the same quarter last year, not just the previous quarter, to account for seasonality. 

Part I, Item 4: Controls and Procedures. Flags any new issues with internal controls. 

What Events Should You Track in Form 8-K? 

The 8-K reports significant events within four business days. Not every 8-K matters, but some do: 

• Item 5.02: Departure or appointment of a CEO, CFO, or board member 

• Item 1.01: Entry into material contracts (partnerships, acquisitions, divestitures) 

• Item 2.02: Results of operations and financial condition (often earnings releases) 

• Item 1.03: Bankruptcy or receivership 

• Item 8.01: Other events management considers material 

Read 8-Ks when they appear. They often explain sudden stock price movements. 

What Should You Review in the Proxy Statement? 

The proxy statement (DEF 14A) covers governance and executive compensation. It appears once a year before the annual shareholder meeting. 

Check these sections: 

Executive compensation tables. Shows salary, bonus, stock awards, and option grants for the CEO, CFO, and the next three highest paid officers. Compare total compensation to company performance over the same period. 

Compensation Discussion and Analysis (CD&A). Explains how the board sets pay. Look for metrics tied to bonuses and stock awards. Are they linked to revenue growth, profitability, or total shareholder return? Or are they vague? 

Related party transactions. Discloses business deals between the company and its executives, directors, or their family members. Large or unusual transactions here warrant scrutiny. 

Board composition. Lists director names, backgrounds, committee assignments, and attendance records. Note how many directors are independent versus how many have ties to management. 

How Should You Track Insider Buying and Selling? 

Insiders (officers, directors, and 10% shareholders) must report trades within two business days: 

• Form 3: Initial statement of beneficial ownership when someone becomes an insider 

• Form 4: Statement of changes in beneficial ownership (reports purchases and sales) 

• Form 5: Annual statement of changes not reported earlier (rare, used for small transactions) 

Look for patterns, not isolated trades. One executive selling shares might mean nothing. Five executives selling in the same month could signal concern about near term results. 

Conversely, multiple insiders buying shares with their own money often indicates confidence. 

What Measures Should You Pull from the Financial Statements? 

How Do You Assess Revenue Growth and Stability? 

Revenue is the top line. Start here: 

• Compare year over year growth rates over at least three years 

• Check for consistency (steady 10% annual growth is usually better than 50% one year followed by a decline) 

• Break revenue into segments if the company reports them (geographic regions, product lines, customer types) 

• Watch for concentration risk (one customer accounting for more than 10% of revenue) 

How Do Margin Trends Tell You About Profitability? 

Margins show how much of each revenue dollar turns into profit. Track three levels: 

Gross margin = (Revenue - Cost of Goods Sold) / Revenue 

This measures production efficiency. Rising gross margin suggests pricing power or lower input costs. Falling gross margin points to competitive pressure or rising material costs. 

Operating margin = Operating Income / Revenue 

This captures the cost of running the business after production. Compare operating margin to competitors. A narrowing gap between gross and operating margin means operating expenses are rising faster than revenue. 

Net margin = Net Income / Revenue 

This is the bottom line after interest, taxes, and one time items. Net margin below industry peers suggests the company is less efficient or carries more debt. 

Why Should Cash Flow Matter More Than Net Income? 

Net income includes non cash charges like depreciation and stock based compensation. Cash flow shows actual dollars moving in and out. 

Cash flow from operations (CFO). Found in the cash flow statement. This is the cash the business generates from its core activities. A healthy company produces positive and growing CFO. 

Free cash flow (FCF). Not always labeled in the filing, but you can calculate it: 

FCF = Cash Flow from Operations - Capital Expenditures 

Capital expenditures appear in the investing section of the cash flow statement. FCF tells you how much cash remains after the company maintains and grows its asset base. 

Compare net income to CFO over several years. A persistent gap (net income much higher than CFO) suggests earnings quality issues. 

How Do You Evaluate Debt Levels? 

Debt is not inherently bad, but too much debt limits flexibility and increases risk. 

Total debt. Sum short term debt and long term debt from the balance sheet. 

Debt to equity ratio = Total Debt / Shareholders' Equity 

Ratios above 2.0 warrant closer review, though acceptable levels vary by industry. Capital intensive businesses (utilities, telecom) carry more debt than software companies. 

Interest coverage ratio = Operating Income / Interest Expense 

This measures how easily the company can pay interest. A ratio below 2.5 suggests the company is stretched. 

Debt maturity schedule. Found in the debt footnote. This table shows when each tranche of debt comes due. Watch for large maturities in the next 12 to 24 months, especially if the company's credit rating is weak or interest rates are rising. 

What Do Working Capital Shifts Reveal? 

Working capital measures short term financial health: 

Working Capital = Current Assets - Current Liabilities 

Dig into the components: 

Accounts receivable. Money customers owe. Calculate days sales outstanding (DSO): 

DSO = (Accounts Receivable / Revenue) x 365 

Rising DSO means customers are paying slower, which could signal collection problems or aggressive revenue recognition. 

Inventory. Goods waiting to be sold. Calculate days inventory outstanding (DIO): 

DIO = (Inventory / Cost of Goods Sold) x 365 

Rising DIO suggests slowing demand or obsolete stock. 

Accounts payable. Money the company owes suppliers. Calculate days payable outstanding (DPO): 

DPO = (Accounts Payable / Cost of Goods Sold) x 365 

Rising DPO might mean the company is stretching payments to preserve cash, which can strain supplier relationships. 

How Do Share Count Trends Affect You? 

Shares outstanding. Found on the balance sheet or in the equity footnote. Track this over time. 

Dilution. Happens when the company issues new shares (stock based compensation, convertible debt, stock offerings). Dilution reduces your ownership percentage and earnings per share. 

Buybacks. Reduce share count and boost EPS, assuming the company doesn't overpay. Check the cash flow statement under financing activities to see how much the company spent on repurchases. 

Which Return Ratios Should You Calculate? 

Return on equity (ROE) = Net Income / Shareholders' Equity 

Measures how efficiently the company uses shareholder money. ROE above 15% is generally strong, but compare to industry peers. 

Return on assets (ROA) = Net Income / Total Assets 

Shows how well the company generates profit from its assets. ROA is most useful when comparing companies with different capital structures. 

What Measures Should You Extract from the Footnotes? 

The footnotes clarify and expand on the financial statements. They run 30 to 100 pages. Focus on these areas: 

What Accounting Policy Choices Should You Notice? 

The first footnote (often called "Summary of Significant Accounting Policies") explains how the company recognizes revenue, values inventory, depreciates assets, and more. 

Compare policies to competitors. For example: 

• Does the company use FIFO or LIFO for inventory? (LIFO can understate profits during inflation) 

• How long is the useful life for depreciation? (Longer lives reduce annual depreciation expense and inflate earnings) 

• When does the company recognize revenue? (Aggressive recognition inflates current results) 

What Changes in Methods Should Concern You? 

Companies sometimes change accounting policies. The footnote must disclose the change and its impact on financial results. 

Ask yourself: Why now? Does the change make results look better? Does it align with how peers account for similar transactions? 

Frequent changes suggest management is managing earnings rather than managing the business. 

What Contingent Liabilities Should You Watch? 

The commitments and contingencies footnote lists potential obligations: 

• Pending lawsuits and the estimated range of losses 

• Environmental liabilities 

• Guarantees and indemnifications 

• Purchase commitments 

Material contingent liabilities can become real liabilities. Track changes from quarter to quarter. 

What Off Balance Sheet Items Should You Identify? 

Some obligations don't appear on the balance sheet but still create risk: 

• Operating leases (though new accounting rules now require most leases to be recorded) 

• Joint ventures and unconsolidated subsidiaries 

• Special purpose entities 

The footnotes must disclose these arrangements. Large off balance sheet exposures can hide the true financial risk. 

What Measures Should You Find in MD&A? 

MD&A is management's narrative. It bridges the numbers and the strategy. 

What Drivers Should Explain Changes in Revenue and Costs? 

Management must explain material changes. Look for specifics: 

• "Revenue increased 12% due to a 7% rise in unit volume and a 5% increase in average selling price" 

• "Cost of goods sold rose 15% due to higher raw material costs, partially offset by manufacturing efficiencies" 

Vague language ("due to market conditions") tells you nothing. Detailed explanations help you forecast whether trends will continue. 

What Should Management Expect for the Next Period? 

MD&A often includes forward looking statements about liquidity, capital spending, and market conditions. These are not guarantees, but they show you management's assumptions. 

Compare expectations from last year's MD&A to actual results. Did management deliver on guidance? If not, why not? Repeated misses suggest poor forecasting or poor execution. 

Which Business Segments Should Show Strength or Weakness? 

If the company has multiple segments, MD&A breaks out performance for each. Track segment revenue, operating income, and margins over time. 

A single strong segment can mask weakness elsewhere. A declining segment that management ignores in the narrative might be a problem they're hoping you'll overlook. 

What Liquidity Needs and Capital Plans Should You Note? 

MD&A includes a liquidity section that discusses: 

• Sources of cash (operations, credit lines, asset sales) 

• Uses of cash (capital expenditures, debt repayment, dividends) 

• Planned spending for the next 12 months 

• Available credit and covenant compliance 

If the company has limited cash and large upcoming debt maturities, you need to understand the refinancing plan. 

What Measures Should You Monitor in the Risk Section? 

Risk factors appear in Item 1A of the 10-K and in Part II, Item 1A of the 10-Q. 

What New Risks Should Grab Your Attention? 

Compare this year's risk section to last year's. New risks could include: 

• Regulatory changes 

• New competitors 

• Supply chain disruptions 

• Customer concentration 

• Cybersecurity threats 

Management must disclose material risks. A new risk factor often previews bad news before it shows up in the numbers. 

What Specific Risks Should Tie to Products, Customers, or Markets? 

Generic risk language appears in every filing ("economic downturns could hurt demand"). Ignore it. Focus on risks unique to this company: 

• "Loss of our relationship with Customer X, which accounted for 18% of revenue, would materially harm results" 

• "We face patent litigation that, if decided against us, would prevent us from selling Product Y" 

• "We operate in Country Z, where political instability could disrupt operations" 

These risks are actionable. You can monitor developments and adjust your view accordingly. 

What Measures Should You Review in the Proxy Statement? 

How Should Pay Tie to Performance? 

The CD&A section explains the link between executive pay and company performance. Look at the metrics used for annual bonuses and long term incentive awards. 

Strong pay design uses: 

• Multiple metrics (revenue, operating margin, return on invested capital) 

• Peer relative performance (total shareholder return versus the S&P 500 or an industry index) 

• Multi year vesting for equity awards 

Weak pay design uses: 

• Single metrics that are easy to manipulate 

• Low performance thresholds 

• Guaranteed bonuses regardless of results 

What Pay Increases Should Raise Concerns? 

Compare CEO total compensation to revenue growth, earnings growth, and total shareholder return over the same period. 

If pay rises 40% while revenue is flat and the stock is down, the board is not holding management accountable. 

What Related Party Transactions Should You Question? 

Related party transactions include: 

• The company leasing office space from a building owned by the CEO 

• Consulting fees paid to a director's firm 

• Loans to executives 

These aren't always improper, but they create conflicts of interest. Ask whether the terms are fair and whether an independent third party would have offered the same deal. 

What Board Structure and Voting Power Should Matter? 

Look at: 

Board independence. How many directors are independent versus insiders or affiliates? Independent boards provide better oversight. 

Committee composition. The audit, compensation, and nominating committees should consist entirely of independent directors. 

Dual class stock. Some companies issue multiple share classes with different voting rights. Founders or insiders might hold Class B shares with 10 votes per share while public investors hold Class A shares with 1 vote per share. This structure entrenches management and limits your influence. 

Poison pills and staggered boards. Anti takeover provisions that make it harder for activist investors or acquirers to gain control. These can protect bad management from accountability. 

Bottom Line? 

SEC filings give you unfiltered access to a company's financial reality. You can't analyze every line, but you can focus on the measures that reveal performance, risk, and management quality. 

Start with the financial statements for the numbers. Move to MD&A for management's explanation. Check the footnotes for details that change your interpretation. Read the risk factors for what could go wrong. Scan 8-Ks and insider trades for real time updates. Review the proxy for governance and pay alignment. 

Build a repeatable process. Track metrics over time. Compare to peers. Document changes. Over time, you'll develop an intuition for what matters and what's noise. 

The companies that pass your review earn your capital and your trust. The ones that fail give you the chance to avoid costly mistakes. 

Frequently Asked Questions 

How often should you review filings for a company you own?

Read each 10 Q soon after it appears. Read the 10 K and the proxy once a year. Watch 8 K filings as they show up. This gives you steady coverage without much strain. 

Which section should you read if you only have 30 minutes?

Start with MD&A. Then look at the risk factors. Finish with the cash flow statement. You catch most issues with this order.

Should you use EPS as your main measure?

No. EPS changes when companies repurchase shares or adjust items. Look at revenue trends and cash flow because they give you a more honest view. 

What should you do if you find a red flag?

Go to the footnotes. Compare the number with earlier filings. Check if peers face the same issue. If the problem stays unclear, treat it as a warning. 

Do you need to read every footnote?

No. Read the ones on accounting policies, revenue, debt, stock based pay, and commitments. Read others when the financials point you there. 

How do you judge insider selling?

Look at size and timing. Small and rare sales look routine. Large sales by several executives in a short period deserve attention. Also check if the trades follow a 10b5-1 plan.

What is the difference between GAAP and non GAAP measures?

GAAP measures follow set rules. Non GAAP measures remove certain items. Always review the reconciliation. Large or repeated adjustments should raise questions.

Should you trust the auditor’s opinion?

A clean opinion gives you a starting point. Any qualified or adverse opinion is a serious warning. Also read the section on controls because weaknesses there reduce confidence in the numbers.