What's In a 10-K Filing: Section-by-Section Investor Guide
The average 10-K filing contains over 500,000 characters of text. Most investors don't know what sections exist, let alone where to find specific information. This guide breaks down every section and explains what investors actually find in each.
The average 10-K contains over 500,000 characters of text. Most investors don't know what sections exist, let alone where to find specific information. This guide breaks down the actual structure of a 10-K filing and explains what investors find in each section.
A 10-K is divided into two parts: Part I covers business operations (who the company is, what risks it faces), and Part II covers financial information (the numbers, accounting policies, and management's explanation). Most experienced investors focus on three sections: Item 1A (Risk Factors), Item 7 (MD&A), and Item 8 (Financial Statements with footnotes).
Part I: Business Overview
Part I describes the company and its operating environment.
Item 1: Business Description
The opening section describes what the company does, its products and services, competitive landscape, and business strategy. For companies you're unfamiliar with, this is where to start.
What to look for:
- How management describes their competitive moat
- Key products and their contribution to revenue
- Regulatory environment affecting the business
Typical size: 8% of the average 10-K
Item 1A: Risk Factors
This section lists everything that could go wrong. Most investors skim it as boilerplate, but the real value is in year-over-year changes.
What to look for:
- New risks that weren't in last year's filing (emerging concerns)
- Escalated language ("may affect" becoming "will likely affect")
- Removed risks (resolved or no longer material)
Typical size: 6.7% of the average 10-K (69,942 characters)
Pro tip: Risk Factors is the second-largest narrative section. When a company adds new risk factors about AI competition, supply chain concentration, or regulatory scrutiny that didn't exist before, management is signaling concern—even if they don't say so explicitly.
Item 1B: Unresolved Staff Comments
This section discloses any unresolved comments from SEC staff about prior filings. Most companies have nothing here (average: 787 characters). When this section is substantial, it's a red flag indicating SEC scrutiny.
Red flag examples (from 2025 filings):
- Honeywell: 202,675 characters (significant SEC concerns)
- Paychex: 13,267 characters
- Morgan Stanley: 3,721 characters
Item 1C: Cybersecurity (NEW)
A new SEC requirement starting in 2024. Companies must disclose their cybersecurity risk management, strategy, and governance.
What to look for:
- Whether the company has experienced material cybersecurity incidents
- Board oversight of cybersecurity risks
- Third-party risk management
Typical size: 2.9% of the average 10-K (17,678 characters), but varies widely by industry—utilities and financial services often have extensive disclosures.
Items 2-4: Properties, Legal Proceedings, Mine Safety
Brief sections covering physical assets (Item 2), material lawsuits (Item 3), and mining safety disclosures (Item 4, mining companies only).
When Legal Proceedings matters: If this section exceeds 50,000 characters, the company faces significant litigation. McDonald's (144,918 chars) and Honeywell (205,548 chars) are recent examples.
Part II: Financial Information
Part II contains the financial statements and management's explanation of results.
Item 7: MD&A (Management's Discussion and Analysis)
The single most important narrative section. Management explains financial performance, discusses trends, and provides context for the numbers. This is where you learn why margins changed, not just that they changed.
What to look for:
- Year-over-year explanations for revenue and margin changes
- Known trends or uncertainties affecting future results
- Critical accounting estimates (assumptions management makes)
- Liquidity and capital resources discussion
Typical size: 11.2% of the average 10-K (125,133 characters)—the largest single section.
See it in action: Explore NVIDIA's Filing Intelligence to see how MD&A reveals the story behind data center revenue growth and margin expansion.
Item 7A: Market Risk Disclosures
Quantitative and qualitative disclosures about exposure to interest rates, foreign exchange, commodity prices, and other market risks.
What to look for:
- Sensitivity analysis (how much would a 1% rate change affect earnings?)
- Hedging strategies and their effectiveness
- Geographic currency exposure
Typical size: 7,862 characters
Item 8: Financial Statements and Footnotes
The audited financial statements plus the footnotes, which contain crucial details that don't appear in the primary statements.
Key insight: Footnotes comprise 36.9% of the average 10-K—yet most investors skip them entirely.
The Footnotes: Where Insights Hide
The footnotes in Item 8 contain the details that matter most for investment analysis. Here are the most important ones:
| If You Want To Know... | Look In This Footnote |
|---|---|
| How revenue is recognized | Revenue Recognition |
| Breakdown by business segment | Segment Information |
| Debt maturities and covenants | Debt and Credit Facilities |
| Stock compensation expense and dilution | Stock-Based Compensation |
| Hidden liabilities and guarantees | Commitments and Contingencies |
| Accounting rule changes | Summary of Accounting Policies |
| Customer concentration | Concentrations |
| Lease obligations | Leases |
The 5 Most Important Footnotes
1. Summary of Significant Accounting Policies
The longest footnote (21,856 chars average). Establishes how the company interprets accounting rules—and changes here can signal earnings manipulation. Watch for revenue recognition policy changes that accelerate income.
2. Segment Information
Reveals where revenue actually comes from. Consolidated numbers can hide concentration risk. NVIDIA's Data Center segment at 87% of revenue is a classic example—you'd miss this looking only at total revenue.
3. Revenue Recognition
How and when does the company record sales? Changes from "recognized over time" to "recognized at delivery" can inflate current earnings at the expense of future periods.
4. Stock-Based Compensation
Shows the real cost of equity compensation. Companies with SBC exceeding 10% of revenue face significant shareholder dilution. Intuit at 10.5% is a recent example.
5. Commitments and Contingencies
Hidden liabilities: purchase obligations, lease commitments, pending litigation, and guarantees that don't appear on the balance sheet.
From our analysis of 314 recent 10-Ks: Related Party Transactions appears in only 51% of filings. When present, it's worth scrutinizing—these are deals with insiders, major shareholders, or their family members.
Item 9: Controls and Procedures
Disclosure about internal controls over financial reporting. Material weaknesses here are red flags indicating the company's financial reporting may be unreliable.
Quick Reference: 10-K Structure
| Part | Item | Section | What You Find | % of 10-K |
|---|---|---|---|---|
| I | 1 | Business | Company description, strategy | 8.0% |
| I | 1A | Risk Factors | Material risks | 6.7% |
| I | 1B | Staff Comments | SEC concerns (red flag if present) | 0.1% |
| I | 1C | Cybersecurity | Cyber risk management (NEW) | 2.9% |
| I | 2 | Properties | Physical assets | 0.4% |
| I | 3 | Legal | Material lawsuits | 0.5% |
| II | 7 | MD&A | Management's narrative | 11.2% |
| II | 7A | Market Risk | Interest/FX/commodity exposure | 0.8% |
| II | 8 | Financials | Statements + footnotes | 36.9% |
| II | 9 | Controls | Internal controls | 0.7% |
Where to Start
If you're new to 10-K analysis, focus on these three sections:
- Item 1A (Risk Factors) — Scan for new risks vs. last year
- Item 7 (MD&A) — Read management's explanation of results
- Item 8 footnotes — Check Segment Information and Revenue Recognition
For quarterly updates on the same company, the 10-Q follows a similar structure but with less detail. See our 10-Q quarterly filing guide.
Try It Yourself
MetricDuck's Filing Intelligence extracts these sections automatically, highlighting key changes and linking to original SEC filing text. Start with any S&P 500 company:
- Apple Filing Intelligence — Segment and geographic breakdown
- NVIDIA Filing Intelligence — Risk evolution and concentration
- Adobe Filing Intelligence — Accounting policies and SBC
Every insight links to the original SEC filing section for verification.
Related Guides
- How to Research a Stock Before You Buy — Beginner's guide to stock analysis
- How to Analyze 10-Q Quarterly Filings — Quarterly filing structure
- Earnings Quality: The Complete Framework — Deep dive on cash flow verification
- Earnings Quality Hub — Accounting analysis across industries