Financial Statements – Review and Interpretation

A 10-K is an annual filing that U.S. public company’s must file with the Securities & Exchange Commission (SEC).  According to the SEC website “If you want to follow or invest in a U.S. public company, you can find a wealth of information in the company’s annual report on Form 10-K. Among other things, the 10-K offers a detailed picture of a company’s business, the risks it faces, and the operating and financial results for the fiscal year. Company management also discusses its perspective on the business results and what is driving them”.  

“There is a lot of overlap in the requirements for the 10-K and the annual report to shareholders, but there are also important differences. The 10-K typically includes more detailed information than the annual report to shareholders. The annual report to shareholders, unlike the 10-K, sometimes appears as a colorful, glossy publication.”

“The company writes the 10-K and files it with the SEC. Laws and regulations prohibit companies from making materially false or misleading statements in their 10-Ks. Likewise, companies are prohibited from omitting material information that is needed to make the disclosure not misleading. In addition, the Sarbanes-Oxley Act requires a company’s CFO and CEO to certify the accuracy of the 10-K.”

“The SEC neither writes the 10-K nor vouches for its accuracy. The SEC sets the disclosure requirements – the topics that all companies must cover in their 10-Ks, and how the information should be presented.”  (https://www.investor.gov/news-alerts/investor-bulletins/how-read-10-k, 9/7/2011)

To assist you in learning about a 10-K filing, please answer the following questions from the 10-K of Facebook, Inc. for the fiscal year ended December 29, 2019:

Link to the Facebook, Inc. 10-K filing for the fiscal year ended December 29, 2019: 

https://www.sec.gov/ix?doc=/Archives/edgar/data/1326801/000132680120000013/fb-12312019x10k.htm

1. What products does Facebook offer and what is their description?

2. What is Facebook’s mission? 

3. Who is Facebook’s: 

a. Chief Executive Officer (CEO)

b. Chief Financial Officer (CFO)

c. Chief Accounting Officer (CAO)

4. How does Facebook manage intellectual property?

5. In Facebook’s Share Repurchase Program,

a. What were the total number of shares repurchased from November 1-30, 2019? 

b. What was the average price paid per share from November 1-30, 2019?

6. Facebook prepares the components of Income Before Provision for Income Taxes.  For the Year Ended December 31, 2019, what was the Income before Provision for Income Taxes:

a. Domestic?

b. Foreign?

7. According to the Consolidated Statements of Income Data Year Ended December 31, 2019: 

a. What was Facebook’s revenue? 

b. What was the total costs and expenses?

c. What was their net income?

8. What is the heading for the Consolidated Balance Sheet? 

9. According to the Consolidated Balance Sheets Data as of December 2019: 

a. What are the total assets?

b. What is the additional paid-in capital?

c. What is the total stockholders’ equity?

10. What is Facebook’s main source of revenue? 

11. For the Consolidated Statements of Income for Year Ended December 31, 2019:

a. What is the revenue?

b. What is the cost of marketing and sales?

c. What is the income from operations?

d. What is the net income? 

12. What is the par value share of Facebook’s Common, Class A stock?

13. What does Facebook’s Cost of Revenue consist of?

14. How does Facebook account for foreign currency?

15. What is Facebook’s Free Cash Flow for the year ended December 31, 2019?

16. Does Facebook have long-term debt?

17. In Facebook’s Geographical Information, how many long-lived assets as of December 31, 2018 are in?

a. United States?

b. Rest of the world?

c. Total long-lived assets?