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Recommended AAII Tools & Benefits
For the member wondering where to start, the AAII editorial staff recommends the following list of AAII tools and benefits.
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Frequently Asked Questions About Financial Statements
Reading a company's literature can still be a mystery if you don't understand the jargon.
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As a portfolio manager, one of my favorite Web sites is the SEC’s www.sec.gov. There’s a wealth of information here and it’s all free. In a world full of marginal financial sites, this one stands out.
While the site covers a lot of ground, the section most relevant to individual investors is Filings and Forms, better known as EDGAR.
EDGAR stands for electronic data gathering and retrieval. The SEC requires all entities offering securities to the general public to make periodic filings to the SEC electronically, through EDGAR.
This is the portion of the site I use most frequently—especially the Search for Company Filings function, which allows you to type in a company’s name and see all the filings for the last 10 years.
What, in particular, should you look for? Key filings to be aware of include:
Form 10-K
This is the annual report every public firm files with the SEC within 75 days of the firm’s year-end. If you want a clear and concise report on what a company does and how it’s faring, this is it. Key information usually not included in the Annual Report to Shareholders is found here, including: competitors, channels of distribution, head count, concentration of customers, marketing initiatives, manufacturing infrastructure, litigation, and important business trends.
Form 10-Q
This is the quarterly report every company files within 45 days of its quarter-end, with more detail than quarterly reports to shareholders.
Form 8-K
This is the disclosure of a non-recurring material event, such as a merger,...
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Long-term investors buy shares of a company with the expectation that the company will produce a growing future stream of cash or earnings.
Profits point to the company’s long-term growth and staying power.
But “more” profits aren’t necessarily better than “less.” Oil companies have been in the headlines for generating “record profits” that are larger than any other firms in U.S. history. But from an investor’s standpoint, that doesn’t necessarily make them the most profitable firms.
That’s because profit figures are absolute numbers—they are simply a firm’s revenues less its costs. They don’t relate profits to the size of the company in terms of sales, its total resources or the amount of money investors have put into the company.
How can you put the...
