Form 10-Q

Article byWallstreetmojo Team
Edited byAshish Kumar Srivastav
Reviewed byDheeraj Vaidya, CFA, FRM

What Is Form 10-Q?

Form 10-Q is a comprehensive report on the company’s quarterly performance, which is required by the United States Securities & Exchange Commission (SEC) and consists of unaudited financial statements that provide an overview of the company’s financial situation.

Form-10-Q

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Source: Form 10-Q (wallstreetmojo.com)

10-Q for each first three quarters in a year is to be submitted by the companies to the SEC within a specified time from the end of the quarter, and the report for the fourth quarter is combined with the information for the full fiscal year, i.e., it is to be submitted on the SEC in Form 10-K. Therefore, no 10-Q SEC filingSEC FilingSEC filings are formal documents submitted to the Securities and Exchange Commission in the United States that contain financial information about the company as well as any other relevant information about recent or upcoming activities.read more is required in the fourth quarter as after this quarter; the annual form 10-K is filed.

Form 10-Q Explained

Form 10-Q is an unaudited report submitted to the SEC in which firms have to disclose their relevant information for their financial position. It provides investors with information about the financial position of the companies on an ongoing basis.

The filing for each first three quarters in a year is to be submitted by the companies to the SEC within a specified time from the end of the quarter.

The report for the fourth quarter is combined with a report for the full fiscal yearFiscal YearFiscal Year (FY) is referred to as a period lasting for twelve months and is used for budgeting, account keeping and all the other financial reporting for industries. Some of the most commonly used Fiscal Years by businesses all over the world are: 1st January to 31st December, 1st April to 31st March, 1st July to 30th June and 1st October to 30th Septemberread more, i.e., it is to be submitted on the SEC Form 10-K. This is because federal securities laws made it mandatory for publicly-traded companies to provide some information to the company’s shareholders and the general public.

It discloses the company’s unaudited financial statements and gives an overview of the company’s financial situation. This form is available on the EDGAR database of the SEC.

There are three categories of fillers in which they are classified, which determine the different deadlines to which the company under consideration belongs. This category is known as the company’s public float, where a public float represents a portion of the corporate shares in the hands of the public and that are not held by the officers, owners, or government. All companies require to filing it based on the Form 10-Q instructions and within 40 or 45 days, depending on the size of the public float after the end of the quarter.

The report in Form 10-KForm 10-KPublic firms in the United States of America file Form 10-K. It is a detailed statement of the company's annual financial performance that is filed with the Securities and Exchange Commission (SEC) within 60 days of the end of the fiscal year.read more, unlike 10-Q, is an audited one that is filed annually. The deadline for filing the 10-Q depends on the company’s available float.

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Template

The Form 10-Q checklist comprises two parts:

First Part

The first part contains the relevant financial informationFinancial InformationFinancial Information refers to the summarized data of monetary transactions that is helpful to investors in understanding company’s profitability, their assets, and growth prospects. Financial Data about individuals like past Months Bank Statement, Tax return receipts helps banks to understand customer’s credit quality, repayment capacity etc.read more of the company covering the period, which includes the financial statementsFinancial StatementsFinancial statements are written reports prepared by a company's management to present the company's financial affairs over a given period (quarter, six monthly or yearly). These statements, which include the Balance Sheet, Income Statement, Cash Flows, and Shareholders Equity Statement, must be prepared in accordance with prescribed and standardized accounting standards to ensure uniformity in reporting at all levels.read more in condensed form, discussions of the management, and an analysis of the company’s financial condition.

Second part

The second part contains all other pertinent information, including information on the legal proceedings during the period, unregistered sales of the equity securities, use of its proceeds, etc.

Example

Let us consider the following example to understand the Form 10-Q meaning more clearly:

Company XYZ ltd is a publicly-traded companyPublicly-traded CompanyPublicly Traded Companies, also called Publicly Listed Companies, are the Companies which list their shares on the public stock exchange allowing the trading of shares to the common public. It means that anybody can sell or buy these companies’ shares from the open market.read more in the US. Accordingly, XYZ ltd has to submit Form 10-Q to the SEC, including details of the discussion of the management and the analysis of the company’s financial statements, unaudited quarterly financial information, the notes to financial statements, and all other types of pertinent information as required.

Advantages

  1. The Form 10-Q is filled to disclose the company’s unaudited financial statements and give an overview of the company’s financial situation, which provides a window into the company’s financial health. Investors can use this information form to see the changes taking place in the company before even the company files the quarterly earnings. Some of the areas in which the investors are generally interested include factors affecting the company’s inventory, changes in the working capital account, changes in accounts receivables account, share buybacksShare BuybacksShare buyback refers to the repurchase of the company’s own outstanding shares from the open market using the accumulated funds of the company to decrease the outstanding shares in the company’s balance sheet. This is done either to increase the value of the existing shares or to prevent various shareholders from controlling the company.read more, and other information on the company.
  2. Investors can also use the 10-Q to compare the companies they have invested in or want to invest in the future to see how they are performing. It can give an idea to the investors about whether their choice is correct or not, and further decisions can be taken accordingly.

Disadvantages

  • All publicly traded companies are required to file Form 10-Q on a timely basis. Suppose the company fails to submit the same on time and within the extended time allowed by the SEC.
  • In that case, it will result in consequences, which include the potential loss of registration with the SEC, removal of the company from the exchanges, and legal ramifications.

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