Earnings Inspector beta

Resources

Earnings Inspector was created to act as a starting point for citizens and journalists to learn more about the strength of figures reported in company filings. If a company comes up with questionable scores, this can acts as an indication for journalists to dig deeper.

Here are some useful links for citizens and journalists who never looked into anything finance related before.

To get more info about a company, you can look into the information the company has to file with the SEC, the Security Exchange Commission.

As a rule of thumb, all public companies have to file for registration with the SEC. This is all companies that want to sell parts of their business. Excluded are for instance some small companies that only offer securities to a small number of people.

The SEC has a lot of information on their website about different regulations and it's easy to lose track. The most important information can be found in the actual quarterly and annual filings of the companies. These filings can be found through an SEC tool called EDGAR.

After typing in your company of interest, you will get a long list of different documents. The main filings are the 10Q (quarterly reports) and the 10K (annual reports). In these filings companies report their earnings or losses and how their business is doing.

The good news: Even if you have never read through such a filing, there are some facts you can get from skimming through these reports. Companies do not only have to file numbers, they mostly file a lot of text describing their business, possible risk factors and tax liabilities and ongoing legal proceedings.

One of the richest sources indications of a company’s true performance is in its footnotes and notes - where accountants often hide the less favourable figures. Michelle Leder, the founder of Footnoted, has been digging headlines from company footnotes for years and has written a book on how to read the fine print in financial reports.

Other SEC filings also contain a wealth of information about company events. Proxy filings also contain random notices about company activity, which are deemed to be important to a company’s perceived value for shareholders. Proxy filings can contain great information regarding the sale of stock by a business executive; legal issues or takeover discussions.

The Reynolds National Business Center for Business Journalism has a large number of free online courses and guides on reporting on businesses and financial corruption. While Stockopedia is also a good starting point for explaining financial concepts and translating the relationship between accounting language and its true meaning for shareholders.

Unfortunately currently most company information, regarding company filings is still under pay for use conditions - a luxury many newsrooms can’t afford. It can costs hundreds of thousands of dollars to access readily understandable information about how companies are structured and the relationships between different subsidiaries of the same company and the involvement of directors across companies.

However there have been a number of efforts from people in the Open Data community to remedy this problem. Although not all of the sources are comprehensive they can serve as a good starting point for digging further on company information. One such data set is Open Corporates, run by Chris Taggart in the United Kingdom. The database brings together company filings from 102 jurisdictions and currently has 84.6 million companies in its database. The dataset links back to the original company filing and searches for company or director name across all jurisdictions in the database.

DueDil is another data service, with limited free access, which gives an overview of company filings from Ireland and the UK. It also has an API for pulling large amounts of structured data.