10k of a company || Interview question

Can you please tell me how to answer the following question -

When looking at a 10 k to analyze a company what should you look at first?

Is the appropriate answer cash flow statement?
This is an interview question, how would i go about answering this.

Please help. this is urgent.

 
Best Response

I would either go with the first several pages where management discusses their business, its operations, its risk factors, its competition, etc. or the management discussion and analysis where management discuss the business's financial health and results of operations. I would not consider using the cash flow statement as your answer incorrect, but it is not really original, which is what this question is trying to get at.

 

Generally speaking, I would follow Sil's guidance. If the interview/role is more technical in nature, you need to look at all 3 financial statements for a thorough analysis to understand the health of the company. Does the business have good margins and have they shown earnings growth? How's the strength of the balance sheet? How do they put their cash to use? Dividends? Buybacks? M&A? retained? Just to name a few.

 

id ask my boss why he was late on the capiq payment

  1. business description - gotta know wtf you're looking at
  2. items 6 & 7 (financial data) - getting stronger or weaker? hemorrhaging cash?
  3. risks and legal matters - hidden surprises? lawsuits?
What concert costs 45 cents? 50 Cent feat. Nickelback.
 

I think the appropriate follow up to that question is: "What exactly are we trying to solve here? What's the scope?"

The 10-K can be useful for a variety of situations. While you may sound intelligent speaking to the components of the 10-K when you start running your mouth about everything under the sun that's part of the 10-K, you would most likely impress the interviewer more if you were able to narrow the objective/scope of the question/purpose, and then follow up with the more tailored answer to the interviewer's question. This is my 2c coming from ER and then moving to corp strat role.

 
derpherpderp4760:
I think the appropriate follow up to that question is: "What exactly are we trying to solve here? What's the scope?"

I couldn't agree more. If the purpose is to learn about the business and management's strategy, I'd rather read a few earnings transcripts, which are much more forward looking (and needless to say, much less boring than reading a 10-K).

Now, a friend of mine was recently asked a similar question (he was applying for a Treasurer role): if you could only choose one of the three financial statements, which one would you pick?

He chose the cash flow statement, as you can indirectly get a sense of the income statement, balance sheet, and capital allocation policy by looking at cash flows.

no voy en tren... 7fin.org
 

Is this for an entry-level job? Finance or accounting?

My personal opinion is to look at a 10k to learn more about the company in general. For instance, how many business units does the company have? What size is each business unit? What are the top products in each business unit? What product is the company most known for? What products are most profitable? At what rate is the company and business units expanding/contracting? any recent acquisitions?

Unless this is an accounting job, I don't think you need to dive into crazy detail about SG&A costs, how many shares outstanding the company has, how much they pay in taxes, whatever. In preparing for an interview you need to show interest in the company and show that you did some basic research and know that you actually want the job. Listen to the latest earnings call, read some recent news about the company. No need to go crazy and memorize numbers.

 

Well you should first read the part at the beginning about the company to get an idea of what they do. Also try to get a feel of the industry they're in.

Besides the financial statements, the most important part will probably me the Management Discussion and Analysis. This is basically a note from the company analyzing its performance and future prospects.

You'd also want to look at the Risks section. There is a lot of insubstantial boilerplate stuff in there, but occasionally you will uncover something of note.

  • Capt K
- Capt K - "Prestige is like a powerful magnet that warps even your beliefs about what you enjoy. If you want to make ambitious people waste their time on errands, bait the hook with prestige." - Paul Graham
 

Free Cash Flow and EBITDA multiples is usually what I check out first. Past growth, future growth prospects. ROI and ROE. How do they compare to their competitors. Is management credible, look at what management has given for guidance in the past and what they were actually able to do. Do they have some sort of "moat" (competitive advantage). Who the key shareholders are.

 

Ut unde velit eius vel aperiam. Eum dolor atque non. Et aut quisquam rerum ut in accusamus qui vero. Nulla perferendis sapiente odit ea. Rerum est possimus rem impedit ratione eum.

Aut nihil corrupti atque magnam sit. Quisquam quidem ullam dolorem ut. Iste architecto voluptas commodi voluptatem sit quia cupiditate. Inventore repudiandae et sunt illum debitis molestiae debitis. Omnis saepe dolorem labore et libero ab accusamus.

Career Advancement Opportunities

March 2024 Investment Banking

  • Jefferies & Company 02 99.4%
  • Goldman Sachs 19 98.8%
  • Harris Williams & Co. (++) 98.3%
  • Lazard Freres 02 97.7%
  • JPMorgan Chase 03 97.1%

Overall Employee Satisfaction

March 2024 Investment Banking

  • Harris Williams & Co. 18 99.4%
  • JPMorgan Chase 10 98.8%
  • Lazard Freres 05 98.3%
  • Morgan Stanley 07 97.7%
  • William Blair 03 97.1%

Professional Growth Opportunities

March 2024 Investment Banking

  • Lazard Freres 01 99.4%
  • Jefferies & Company 02 98.8%
  • Goldman Sachs 17 98.3%
  • Moelis & Company 07 97.7%
  • JPMorgan Chase 05 97.1%

Total Avg Compensation

March 2024 Investment Banking

  • Director/MD (5) $648
  • Vice President (19) $385
  • Associates (86) $261
  • 3rd+ Year Analyst (13) $181
  • Intern/Summer Associate (33) $170
  • 2nd Year Analyst (66) $168
  • 1st Year Analyst (202) $159
  • Intern/Summer Analyst (144) $101
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

1
redever's picture
redever
99.2
2
BankonBanking's picture
BankonBanking
99.0
3
Betsy Massar's picture
Betsy Massar
99.0
4
Secyh62's picture
Secyh62
99.0
5
GameTheory's picture
GameTheory
98.9
6
DrApeman's picture
DrApeman
98.9
7
dosk17's picture
dosk17
98.9
8
CompBanker's picture
CompBanker
98.9
9
kanon's picture
kanon
98.9
10
Linda Abraham's picture
Linda Abraham
98.8
success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”