Business: Company & Industry Research: Annual Reports & SEC Filings

How do I determine a particular company's market share?

A company's market share is its sales measured as a percentage of an industry's total revenues.

Determine a company's market share by dividing its total sales or revenues by the industry's total sales over a fiscal period. Use this measure to get a general idea of the size of a company relative to the industry.

 Total sales (Revenues) / Industry's total sales, over fiscal period

From Investopedia

Annual reports are tools used to analyze a public company's quality and profitability. They are used primarily by investors to determine whether to buy, hold, or sell stocks (shares of ownership in a company). Annual reports are often found on corporate websites under the "Investors" section; and are also available through our databases, such as MergentOnline.

All U.S. public companies are required to file three reports: 1) Annual Report to Stockholders; 2) 10-K Report; and 3) Proxy Statement.

1) ANNUAL REPORT TO STOCKHOLDERS (ARS): A glossy, full color public relations booklet sent to all stockholders. It has information on past and projected activities, corporate officers, products, personnel needs, financial standing, and much more. Key sections include:

• Letter to Shareholders, or President's Letter: overview of the past year's performance and future prospects. Good for determining a company's "mood" and "personality."
• Auditor's Report: an independent CPA's signed statement affirming that the financial data meets Generally Accepted Accounting Practices standards. Watch for qualifying phrases such as "except for" or "subject to" that may signal problem areas within a company.
• Management Discussion: analysis of data affecting financial standing and performance for the past three years. It includes commentary on the meaning of different financial indicators and how they were derived. Probably the most important and useful section of the report.

Financial Statements:

• Balance Sheet: snapshot of a company's financial condition, based on assets and liabilities, on the date it was published.
• Profit and Loss, or Income Statement: income, expenses, taxes, and retained earnings data for the past 3 years. Useful for comparing with past performance or with companies in similar industries.
• Shareholders' Equity Statement: itemizes all stockholders' investments.
• Cash Flow Statement: a record of net cash inflows and outflows. Shows earning power when compared to previous years.
• Footnotes: important source of facts such as a change of accounting method, pending law suits, unfavorable government regulations, and unusual income and expenses.

2) 10 K REPORT: Includes information on products, distribution, raw materials, market share, competition, research and development, patents, subsidiaries, major properties owned, joint ventures, and areas of vulnerability such as environmental safety or a reliance on a few major customers. Similar to the ARS, but use both for an in-depth company study.

3) PROXY STATEMENT: Sent to all stockholders prior to each annual meeting. Outlines what will be brought up for vote at that meeting. Has hard to find information such as legal actions taken by or against a company, and acquisitions or mergers. Also contains information on board members, top executives, salaries, and major stockholders.

Corporate Filings

All public companies that trade on stock exchanges within the United States are required to file their financial information annually with the Securities & Exchange Commission (SEC). The SEC makes all recent company filings available through a database known as EDGAR. All filings are available as soon as the company submits them. It provides filings from 1996 to the present.

Industry classification codes can be used in the database MergentOnline to search by industry. There are different classification systems.