Lesson 2.5 · 5 of 5 · How to read financial statements
How to read an annual report (10-K): where to look first
An annual report is the full document in which a company sets out its business, its risks and its audited financial statements for the year. Start with the business description and the risks, then management’s commentary, the financial statements and the notes. It is free on the company’s website, SEC EDGAR or Companies House.
Terms in this lesson
- Annual report
- The document in which a company presents its figures and its business for a full year.
- Quarterly earnings
- The three-month figures listed companies publish four times a year.
- Income statement
- How much the company sold over a period, what it spent and how much profit was left.
What is in a 10-K annual report
| Section | What you find |
|---|---|
| Item 1. Business | the business: products, customers, markets, competition |
| Item 1A. Risk Factors | what could go wrong, usually in order of importance |
| Item 3. Legal Proceedings | significant lawsuits under way |
| Item 7. MD&A | management’s explanation of the year’s results |
| Item 8. Financial Statements | the audited financial statements and the notes |
Apple’s 10-K for the financial year ended 27 September 2025 was filed with the SEC on 31 October 2025.
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Create a free accountThe letter to shareholders: how to read it
Definition
What is the letter to shareholders?
The text in which management explains the year in its own words.
Many companies open their annual report with a letter from the chief executive or the chair. Some are widely read: Berkshire Hathaway keeps its shareholder letters from 1977 onwards on its website. Others do without one: Apple’s 10-K has no such letter. The letter is not audited and is written to persuade, so compare it with the figures and with what last year’s letter promised.
The notes to the accounts that matter
The revenue recognition note shows money received in advance. At Apple, on 27 September 2025, 66% of deferred revenue was expected to become revenue within a year.
Apple had $91.3bn of bonds outstanding on 27 September 2025, of which $12.4bn was due in financial year 2026.
Apple’s report says the European Commission fined it €500m on 23 April 2025, a decision Apple has appealed.
Where to find a company’s annual report
- The company’s investor relations pagesAnnual and quarterly reports, presentations and results announcements, usually under “Investors” on the company’s website.
- SEC EDGARFor US companies: search by name or ticker on sec.gov. The annual report is the 10-K, the quarterly one the 10-Q, and major events appear in an 8-K.
- Companies HouseFor UK companies: search the company by name on the Companies House service on GOV.UK to see the accounts it has filed, free of charge.
Lessons are educational. They are not a recommendation to buy or sell. Investing involves risk and you can lose money. Sources: SEC, “How to Read a 10-K” (Investor Bulletin); Apple, 10-K annual report for the financial year ended 27 September 2025, filed on 31 October 2025 (contents, Item 3 on the European Commission fine of 23 April 2025, note on deferred revenue, bond maturities: $91,281m, of which $12,393m in 2026); FCA Handbook, DTR 4.1.3 and 4.1.4; GOV.UK, “Life of a company: annual requirements” (filing deadlines at Companies House); Berkshire Hathaway, shareholder letters page.