Multinational Company Analysis

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A multinational company needs to submit documents such as 10-K and 10-Q to the Security and Exchange Commission (SEC). These documents provide disclosures concerning the company policies and decisions, including compensation of executives. Apart from these documents, the company also presents an annual report for the benefit of shareholders. Based on the study of these documents, shareholders are able to take investment-related decisions. The documents are important as they can enhance or diminish the reputation of the company.

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One can note a few differences between 10-K and annual report. A company with a turnover of $10 million or more needs to submit the document called form 10-K to the SEC. Annual report is informal, as it presents current credentials of the company and its plans. A Company uses the annual report to defend its key decisions. The report is used as a tool to interact with the shareholders. On the other hand, 10-K is the annual report submitted to the SEC at the end of the financial year. One can consider 10-K as a conservative and formal document. It comprises financial statement of the firm, including the profit and loss over the period of one year.

The document comprises financial and non-financial disclosure revealed by the company (Terzo, 2014). General Electric (GE) is a multinational company. It has presented its annual performance to the shareholders in the form of annual report. The annual report comprises photographs of company products. There are sections that deal with issues such as improved technology, sustainable development, business scenario, and performance highlights. The document demonstrates the financial performance of the company over a period of one year. The annual report shows that the company has given importance to issues such as corporate governance and corporate social responsibility.

Through this document, the company demonstrated that it has introduced internal control measures to avoid deliberate and inadvertent errors in the accounts of the firm. The document comprises large numbers of tables, charts, and figures. The report includes an analysis of the future technological challenge. The company has created a strategy to deal with this challenge (GE, 2013). As per the government regulations, the company needs to file an annual report with the SEC. The form 10-K submitted to the SEC is different from the annual report available to the shareholders. The form 10-K is a conventional document when compared with the annual report.

This form gives disclosures, including forward-looking statements. It presents the data regarding the company performance over a period of one year. The first page of the document comprises legal information. This page shows that the company has followed government regulations while preparing the report. The document comprises sections that relate to business, legal issues, financial information, and payment to executives and other expenditures.

The last section of the document comprises exhibits. They provide additional information regarding the performance of the company (GE, 2013). The form 10-K does not comprise large numbers of photographs. It does not include statements that glorify the company achievement. These details are found in the annual report. The document uses a simple style of presenting the data in the form of figures, tables, and charts. On the other hand, annual report does not comprise legal information and disclosures found in 10-K.

In addition to 10-K, companies also submit 10-Q to the SEC. There are differences between 10-K and 10-Q. Form 10-K is the annual report submitted to the SEC. It comprises detailed information concerning the performance of the company over the period of one year. Companies need to submit this document at the end of the financial year. Qualified auditors audit them. The investor obtains considerable information regarding company performance.

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Based on the study of this document, investor can take appropriate decisions. Form 10-Q, on the other hand, is a short document. It does not give detailed information regarding the company performance in a quarter as specified in the document. The information available in this document is unaudited. As per the regulations, companies have 35 days to submit this form. The information may not be considered as accurate. Investors cannot take investment-related decisions based on this document (Manuel, 2014). Form 10-Q comprises two parts. The first part includes financial statements, analysis of the financial result, disclosures, controls, and risks.

The second part comprises information such as legal proceedings, risk factors, defaults, and exhibits (SEC, 2014). The executive compensation found in form-10-K is missing in this form. At the same time, they comprise exhibits. Interestingly, regulators encourage the organization to conduct an analysis of the financial results. This rule allows the company to insert a few forward-looking statements in 10-Q. The company is also able to correct its errors in the form, 10-K.

The management needs to provide quantitative and qualitative data to defend its disclosures and other statements. The company uses this form to explain the measure taken to avoid errors in the accounts. The document needs to give information regarding the legal disputes pertaining to the relevant quarter. This implies that the company need not give information regarding the legal proceedings of previous quarters (SEC, 2014). Form 10-K and form 10-Q are dissimilar, as they pertain to different financial periods. Form 10-Q discusses short-term issues, and form 10-K analyzes issues having long-term impact on the company operations.

Form 10-K comprises a few interesting disclosures. They include information regarding legal disputes, which can affect company operations in the long-term. One disclosure mentions that shareholders filed a suit against the GE executives and officials. Through the lawsuit, shareholders expressed their grievances regarding the dividend announced by the company in the year 2009. It is interesting to note that the document does not disclose the amount claimed by shareholders from the company.

The case was filed in a district court of the U.S. The document claims that the court has sanctioned a partial dismissal of the plea. At the same time, the company may face losses in the long-term due to legal disputes (GE, 2012). The disclosure is interesting and surprising. It shows the limitations of the company’s financial system. Shareholders may win a major case against the company. Such a development may affect financial assets of the organization.

Another interesting disclosure relates to pension funding. In the year 2012, the company spent $5.5 billion for post-retirement benefit plans. This amount can be considered as significant. In the future, the company may incur enhanced expenditure related to retirement benefits offered to the employees. The company also discloses the need to allocate more than $13 billion to provide pension to its employees. It is surprising to note that the company has not introduced measures to fund its pension plans. The company also needs to allocate $10 billion to provide life and health plan benefits to the employees (GE, 2012).

In the long-term, the company may face a financial crisis due to lack of funds needed to provide facilities to employees. This may affect the ability of the company to attract most qualified candidates for important positions. The disclosures reveal that various factors can affect company’s long-term growth plans.

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References

GE. (2012). Form 10-K. Web.

GE. (2013). Progress: GE works 2013 annual report. Web.

Manuel, D. (2014). Knowing the difference between 10-K, 10-Q and an 8-K. Web.

SEC. (2014). Form 10-Q. Web.

Terzo, G. (2014). Differences between an annual report & a 10k. Web.

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