How to Use Claude to Analyze a 10-K (2026) | Step-by-Step Prompts

ROLE: You are a highly experienced equity research analyst specializing in fundamental analysis of public companies. Your task is to thoroughly analyze a 10-K annual report, identifying key financial insights, risks, and strategic information. You will act as an expert, providing detailed, actionable intelligence. 

INPUT: I will provide you with the full text of a company's 10-K annual report for the fiscal year [Fiscal Year 1] and the previous fiscal year, [Fiscal Year 2]. I will upload these as two separate PDF documents. 

INSTRUCTIONS: Your analysis should cover the following key areas, with a strong emphasis on year-over-year changes and potential red flags:

1.  **Risk Factor Diffing (Year-over-Year):** Compare the 'Risk Factors' section from [Fiscal Year 1]'s 10-K with [Fiscal Year 2]'s 10-K. Identify any new risks introduced, significant changes in the wording or emphasis of existing risks, and any risks that have been removed. For each identified change, provide a brief explanation of its potential implications for the company's future performance and valuation.
2.  **Segment Economics:** Extract and analyze the reported segment information. Detail revenue, operating income (or loss), and identifiable assets for each segment for both [Fiscal Year 1] and [Fiscal Year 2]. Calculate year-over-year growth rates for revenue and operating income by segment. Discuss any notable shifts in segment contribution to overall revenue or profitability, and analyze the profitability trends of each segment.
3.  **Footnote Traps (Leases, SBC, Related Parties):** Scrutinize the footnotes related to:
    *   **Leases:** Summarize the company's operating and finance lease obligations, including future minimum lease payments and the weighted-average remaining lease term and discount rate for both [Fiscal Year 1] and [Fiscal Year 2]. Highlight any significant changes in lease accounting policies or material new lease commitments.
    *   **Stock-Based Compensation (SBC):** Detail the total stock-based compensation expense recognized for [Fiscal Year 1] and [Fiscal Year 2], broken down by equity instrument (e.g., options, RSUs). Analyze the impact of SBC on diluted EPS and cash flow from operations. Note any changes in SBC plans or significant grants.
    *   **Related Party Transactions:** Identify and summarize all related party transactions disclosed for both periods. Explain the nature of these relationships and the financial impact of these transactions on the company's financial statements. Assess any potential conflicts of interest or unusual terms.
4.  **MD&A vs. Numbers Consistency:** Compare the narrative in the 'Management's Discussion and Analysis of Financial Condition and Results of Operations' (MD&A) section with the actual financial statements. Identify any inconsistencies, discrepancies, or areas where the MD&A commentary does not fully align with the reported numbers. Specifically, look for explanations of performance that are not clearly supported by the financial data or vice-versa. Highlight any forward-looking statements in the MD&A and cross-reference them with historical performance.

FORMAT: Present your findings in a structured report with clear headings for each section (Risk Factor Diffing, Segment Economics, Footnote Traps, MD&A vs. Numbers Consistency). Use bullet points or tables where appropriate for readability. For quantitative data, always include the specific numbers and their respective fiscal years. Conclude with a summary of the most critical insights and potential areas for further investigation. Ensure all extracted data points are cited with their exact location (e.g., 'Page X, Item Y, Paragraph Z' or 'Note X to Financial Statements').

I am uploading two 10-K filings for [Company Name] from fiscal years [Year 1] and [Year 2]. Please confirm successful upload and then provide a high-level overview of the primary business segments and key financial highlights from both reports.

Analyze the 'Risk Factors' sections from both 10-Ks. Identify any new risks introduced in [Year 2]'s 10-K that were not present in [Year 1]'s. Also, pinpoint any risks that were removed or significantly de-emphasized. For existing risks, note any changes in language or ordering that suggest a shift in management's perceived importance or severity. Explain the potential implications of these changes for investors.

Extract and compare the segment-level revenue, gross profit, and operating income for [Company Name] for both [Year 1] and [Year 2]. Discuss the year-over-year trends for each segment, identifying growth drivers or headwinds. Which segments are showing the strongest or weakest performance, and what might be contributing to these trends?

Examine the 'Leases' footnote in both 10-Ks. Detail the total lease liabilities and right-of-use assets for both years. Identify any significant changes in lease accounting policies, new material lease agreements, or unusual terms that could impact future cash flows or financial leverage. Compare the present value of lease payments year-over-year.

Analyze the 'Share-Based Compensation' footnote from both 10-Ks. Quantify the SBC expense for [Year 1] and [Year 2], and calculate its percentage of revenue and operating expenses. Describe the types of awards granted (e.g., RSUs, stock options) and their vesting schedules. Discuss the potential dilutive impact of outstanding awards and compare the year-over-year trends in SBC.

Identify and summarize all 'Related Party Transactions' disclosed in both 10-Ks. For each transaction, describe the nature of the relationship, the parties involved, the terms, and the monetary value. Assess whether these transactions appear to be on an arm's-length basis and discuss any potential conflicts of interest or financial implications for [Company Name].

Compare the narrative explanations in the 'Management's Discussion and Analysis' (MD&A) section with the actual financial figures presented in the consolidated financial statements and footnotes for both years. Highlight any instances where the MD&A's commentary on performance, trends, or future outlook does not fully align with the quantitative data. Are there any optimistic statements in the MD&A that are not clearly supported by the numbers?

Extract and analyze the most prominent operational and financial Key Performance Indicators (KPIs) discussed in both 10-Ks (e.g., gross margin, R&D as % of revenue, inventory turns, customer count, average selling price). Compare their performance year-over-year and discuss what these trends indicate about the company's operational efficiency, market position, and future growth prospects.

Analyze the Statements of Cash Flows for both [Year 1] and [Year 2]. Identify significant changes in cash flow from operations, investing, and financing activities. Discuss the primary drivers of free cash flow and how the company is deploying its capital. Are there any unusual or non-recurring cash flow items that warrant attention?

Based on all the analyses performed, provide a comprehensive assessment of [Company Name]'s financial health, operational strengths, and weaknesses. Summarize the key insights gained from the risk factor changes, segment performance, footnote traps, and MD&A consistency. Conclude with your overall outlook for the company and any specific areas that warrant further due diligence for a retail investor.