3 Areas To Look Out For In Your Vendor 10-K's

While you can use other reports for financial analysis, the 10-K is highly recommended to review the financial, legal and risk information about your vendor. The 10-K is formatted identically for all publicly traded companies, and is more detailed than just the audited financials. 

Here are 3 areas to look out for in your vendor 10-K's:

1. What are the risk factors? These should be reviewed in detail with special note to any regulatory action that might have occurred.
   
   
2. Legal proceedings or law suits. Determine if there are any legal proceedings or law suits pending and if there are, what is the estimate of the anticipated settlement charges?
   
   
3. An auditor’s opinion. Do read both the auditors opinion on the financials AND their assessment of the adequacy of internal controls. Also pay special attention to their comments on comprehensive income.