Cutting Through Form 10-Qs

Between Mother's Day, Father's Day, May weddings and June graduations, it's hard to keep coming up with gift-giving ideas.

So instead of just cutting your loved one a check, how about giving a few shares of stock in really solid company? And since most companies' quarterly reports, formally known as 10-Qs, have recently come due to the Securities and Exchange Commission, all the info you need to make a good choice is readily available.

The 10-Q is a mini-version of the 10-K, otherwise known as the annual report. It's basically a financial report that details what happened to a specific company over the last three months. So if you put money in a publicly traded company, then you should read its 10-Q, says Dan Noll, director of accounting standards at the American Institute of Certified Public Accountants.

You can find these filings online at the SEC's Web site. There's some important stuff in there you should know about.

Avenue Q

The 10-Q is an unaudited document that the SEC requires public companies to file. It's a comprehensive report of the company's performance, due 35 days after each of the first three fiscal quarters. (There is no filing after the fourth quarter because that is when the 10-K is filed.) So the multitude of companies whose first quarters ended March 31should have filed their reports in the past few weeks.

In the 10-Q, you'll find financial statements, a summary discussion from management, and some detail on the "material events" that may have occurred during the period -- like stock splits or acquisitions.

But realize that this document is unaudited. That means the company's auditors don't have to even look at it. Many auditors will review it to make sure there are no gross mistakes, says Ed Ketz, an associate professor or accounting at Penn State University. But the auditors don't have to provide a formal opinion like they do with the annual report.

To view Tracy Byrnes' video take on 10Qs, click here.