MAPLearning map for this lesson
We build it up in three steps. At the end of each step, a 'Quick check' lets you test your understanding before moving on.
Before you startIn Lesson 4 you saw that quarterly reports are due within 45 days after quarter-end and annual reports within 90 days. In Lesson 17 you learned how to compare preliminary earnings with consensus, and in Lesson 2 that a corrected filing is a disclosure that fixes one already filed. For why the market reacts to "the gap versus expectations," see Learn (Economics) Lesson 20 as well.
- STEP 1 · Basic conceptsThe numbers that come first: preliminary earnings
Explain why come out before the periodic reports, and what means.
- STEP 2 · Understanding the mechanismPreliminary vs. final figures, and corrections
Explain why preliminary and final figures can differ, and what to suspect when keep repeating.
- STEP 3 · Applying itFollowing a year along the disclosure timeline
Read the flow of disclosures in order, from preliminary earnings to the annual report, and find where the numbers changed.
Building knowledge146 concepts so far · 4 added in this lesson
Part 1 · Getting to know DART 23 ✓
The five financial statementsPhoto (balance sheet) vs video (income statement and cash flow)Net income → retained earningsEnding cash = balance sheet cashRobin Bakery example companyDisclosure: to all investors at the same timeDART (FSS electronic disclosure system)10 filing typesPeriodic vs timely disclosureDART and KIND3 DART search criteria (company name, period, filing type)Periodic disclosure → annual report filterFinal version and correction markersDocument table of contents and III. Financial MattersChecking table units and fiscal terms3 periodic reports (annual, semi-annual, quarterly)Filing deadlines: 90 days and 45 daysAudit and reviewPreliminary earnings → audit report → annual reportThe 12 chapters of an annual reportBusiness Overview and Financial MattersManagement Discussion and AnalysisThe 10-minute skim order
Part 2 · Balance sheet 27 ✓
Assets = liabilities + equityOther people's money vs your ownA transaction moves both sidesCurrent vs non-current (1-year line)Speed of turning into cashTrade receivables · inventoriesPP&E and depreciationDays sales outstandingCurrent vs non-current liabilities (1-year line)Interest-bearing debt (borrowings, bonds)Operating liabilities (trade payables, advances received)Lease liabilities · provisionsInterest expense and rate sensitivityEquity = assets − liabilities (shareholders' share)Share capital · capital surplus · retained earningsRetained earnings = opening + net income − dividendsCapital impairment ratio = (share capital − total equity) ÷ share capitalAdministrative issue (50%) · delisting (full impairment)Debt-to-equity ratio = liabilities ÷ equityCurrent ratio · quick ratio (ability to repay within a year)Borrowings to total assets and interest coverage ratioComparing with the industry averageConsolidated (whole group) vs separate (one company)Eliminating intercompany transactions and investment sharesNon-controlling interestEPS and ROE on the owners' shareHolding companies: read consolidated and separate together
Part 3 · Income statement 24 ✓
Income statement = a record of one year (a period)Five-step staircase of profitCost of goods sold vs SG&ARevenue = price × quantityGross margin · cost of sales ratioAmplifying effect of cost changesPricing power and pass-throughOperating profit = revenue − cost of goods sold − SG&AOperating marginFixed cost · variable costOperating leverageNon-operating income/expense (interest, translation, equity method, disposals)Pre-tax income and income taxFiltering out one-off gainsEarnings qualityProfit attributable to owners of the parentEPS = profit attributable to owners ÷ weighted average sharesBasic EPS · diluted EPSShare cancellation and EPSTrailing P/E · forward P/EQoQ vs YoYSeasonalityThree-month, year-to-date and implied Q4Preliminary earnings and consensus
Part 4 · Cash flow statement 21 ✓
Cash flow statement = a year of bank-account recordsAccrual profit vs actual cashNon-cash expenses (depreciation)Opening cash + three sections = closing cashOperating · investing · financing sectionsIndirect method: net income + non-cash expenses − increase in working capitalWorking capital (assets up, cash down; liabilities up, cash up)Reading company type from the sign patternFree cash flow (FCF)FCF yieldDividend coverageExpansion-driven vs weak-operations negative FCFInsolvency despite profitsWorking capital increaseGap between profit and cashA structure held up by debtAccruals (net income − operating cash flow)Operating cash flow ratioReceivables and inventory growth vs salesInventory turnoverJudging from a 3+ year trend
Part 5 · Comparing companies with financial ratios 23 ✓
ROE = net income ÷ equityClosing equity vs average equityDuPont analysis (margin × turnover × leverage)The risk of ROE built on debtP/B = P/E × ROEBPS = equity of owners ÷ number of sharesP/B = price ÷ BPS = P/E × ROEROE, required return and a P/B of 1xAsset quality and adjusted BPSTelling market P/B from single-stock P/BPayout ratio · dividend per share · dividend yieldDividends should be covered by FCFDividend record date set after the amount is fixed15.4% dividend income tax · separate taxation for high dividendsRead the payout ratio together with earningsNormal ranges differ by industryChoosing a peer groupComparing with the industry average (BOK Financial Statement Analysis)Banks and insurers use a different yardstick3–5 year trend analysisCompound annual growth rate (CAGR)Peak earnings and the cycleReading several years from summary financial information
Part 6 · Reading disclosures beyond the numbers
7 items of the business overviewRevenue mixKey raw materials and price changesUtilization rateOrder backlogFollowing note numbersContingent liabilities and payment guaranteesRelated-party transactionsSegment reportingSubsequent events4 types of audit opinion (unqualified, qualified, adverse, disclaimer)Going-concern uncertainty paragraphKey audit mattersModified opinions and delistingAuditor-change signalsRights-offering types (rights offering, public offering, third-party allotment)Dilution and changes in EPS and BPSConvertible bonds and the 70% refixing floorTreasury share purchase vs cancellationOrder for reading material event reportsLargest shareholder and related-party stakes5% rule (5 business days, 1 percentage point)3 holding purposes and the cooling-off periodInsider ownership reports and pre-disclosurePreliminary earnings (fair disclosure)NEWPreliminary vs final figuresNEW30% (15% for large corporations) change in earnings structureNEWCorrected filings and unfaithful disclosureNEW
STEP 1The numbers that come first: preliminary earnings
It is like a teacher calling out test scores first, with the official report card arriving a few days later. The score called out first is the preliminary result.
Why announce the numbers early?
As we saw in Lesson 4, quarterly reports are due within 45 days after the quarter ends and annual reports within 90 days. Inside the company, however, the books close much sooner. If a company wants to explain its results to analysts or institutional investors first, it must first release the same information to all investors. This is .
So within a few weeks after a quarter ends, many listed companies first disclose revenue, operating profit, income from continuing operations before income taxes, and net income under titles such as "Consolidated Operating (Preliminary) Results (Fair Disclosure)." These are . This is also the filing behind news like "Q3 operating profit of KRW ○ trillion," which a large manufacturer puts out a little over a week after the quarter ends.
Preliminary earnings = numbers the company tallied itself, before audit or reviewFinal figures come in the quarterly report (reviewed) and the annual report (audited). So read preliminary numbers as "roughly this much" and final numbers as "the official record."
What preliminary earnings contain
A preliminary earnings filing usually shows the current quarter, the prior period (previous quarter), the same quarter a year earlier, and the rates of change. As you learned in Lesson 17, look at the year-over-year (YoY) change first, then compare with market expectations () to judge whether it is an or a shock. For Robin Bakery (fictional), for example, if Q4 preliminary operating profit comes in at KRW 550 million, you read it as up about 28% from KRW 430 million in the prior-year Q4.
Once a year, if it changes by 30% or more
Another filing comes once the annual accounts are done. If any one of revenue, operating profit or loss, or net profit or loss for the latest fiscal year rises or falls by 30% or more from the prior fiscal year (15% or more for large corporations with total assets of KRW 2 trillion or more), the company must file a disclosure. It comes out once the internal accounts are finalized, before the audit report is received, so it shows the annual numbers earlier than the March annual report (per Korea Exchange guidance on year-end results disclosure).
Robin Bakery's operating profit rose 25%, from KRW 1.2 billion in Year 2 to KRW 1.5 billion in Year 3, which is below the 30% threshold for a regular company, so it has no obligation to file this. Net income, however, rose about 33%, from KRW 900 million to KRW 1.2 billion, so it is covered. As you can see, exceeding the threshold on just one of the three figures triggers the filing.
Quick checkA company with total assets of KRW 3 trillion saw operating profit go from KRW 100 billion to KRW 118 billion. Is it subject to the earnings-structure change disclosure?
Yes, it is. It rose 18%. For large corporations with total assets of KRW 2 trillion or more the threshold is 15%, so it must file. If it were a regular company, 18% would fall short of 30% and it would not be covered.
STEP 2Preliminary vs final figures, and corrections
The score called out first may differ slightly from the report card. A small difference is fine, but if it is large or keeps being corrected, you should ask why.
Why do preliminary and final figures differ?
Preliminary earnings are numbers the company tallied itself, while final figures have gone through an accountant's review (quarterly, semi-annual) or audit (annual). In between, judgment items such as inventory valuation, provisions and foreign currency translation may be adjusted, so the numbers change a little. In the real example from Lesson 17, a large manufacturer's Q3 2024 operating profit was about KRW 9.1 trillion in the preliminary results and KRW 9.18 trillion in the final figure in the quarterly report. The difference is just over 1%.
Preliminary vs final figures: compare the size of the gap
The real case uses the numbers confirmed in Lesson 17 (the preliminary KRW 9.1 trillion comes from news coverage of the preliminary results; the final KRW 9.18 trillion is based on the prior-year column of the DART quarterly report (rcpNo 20251114002447)). Robin Bakery and Dark Cloud Electronics use fictional numbers for teaching purposes.
Corrected filings: fixing a filing already made
If [Correction] appears in front of a filing title, it is a fix to a filing already made. When you open a corrected filing, the reason for the correction and a before and after table appear at the very top. Some corrections are simple clerical ones, such as typos or date fixes, while others change investment decisions, such as contract amounts, capital-raise schedules or earnings figures. That is why, with corrected filings, what changed matters more than the title.
The problem is when the same filing is corrected multiple times, or when a contract, investment or capital raise that was already announced is withdrawn. The exchange designates a company as an and assigns penalty points if it files late (failure to disclose), reverses what it already filed (reversal of disclosure), or significantly changes important content (change of disclosure).
147 casesUnfaithful disclosure designations in 2024 · a record high
About 70%Share of KOSDAQ companies among designations over the last 3 years
DecreaseDesignations in 2025 · reflecting tighter management of supply contracts and capital raises
Source: Korea Capital Market Institute, "Status and Implications of Unfaithful Disclosure Designations Among Listed Companies in Korea" (2026-06-01). Failed investment attraction, terminated supply contracts and withdrawn convertible bond issues were cited as background for the 2024 increase.
Common misconceptions
- "If [Correction] is attached, the company definitely has a problem?"
- Many corrections simply fix a plain error. Annual reports are also often corrected to supplement attachments. Judge by looking at which items changed in the before and after table.
- "If preliminary earnings are good, will the final figures be just as good?"
- Most are similar, but companies with many judgment items can see larger gaps. Check the final figures once more together with the audit opinion (Lesson 30).
- "Does every company always disclose preliminary earnings?"
- Quarterly preliminary earnings are often filed when a company wants to announce first, so some companies do not file them. By contrast, a 30% (15% for large corporations) or more change in the annual earnings structure is a mandatory disclosure.
Quick checkA company filed a "Single Sales / Supply Contract" disclosure, then three months later cut the contract amount in half through a [Correction]. What should you suspect?
This is a significant correction that could make the company subject to unfaithful disclosure designation through a change of disclosure. Check from the filing list whether the contract is actually being fulfilled, whether trade receivables are piling up (Lessons 7 and 22), and whether the same company has often corrected other filings.
STEP 3Following a year on the disclosure timeline
If you lay out one company's disclosures for a year in time order, you can see at a glance when the numbers first come out, when they are finalized, and when they are corrected.
Disclosure timeline · Robin Bakery Year 3 closing (fictional) Click a stage to see what comes out and what changes at that point.
Dates and numbers are examples based on a fictional company with a December fiscal year-end. Actual companies may have different disclosure dates.
Find it yourself on DART
As in Lesson 3, search for a company and choose Exchange disclosure in the filing type to see "Operating (Preliminary) Results (Fair Disclosure)" and "Change of 30% (15% for Large Corporations) or More in Revenue or Profit Structure" filings. In the search results list, count the filings with [Correction] in front of the title, and open one to check the before and after table at the top. Whether a company has been designated an unfaithful disclosure corporation appears under the title "Designation of Unfaithful Disclosure Corporation" in the exchange disclosures ().
How to use it in investing
| What the filing shows | How to read it |
|---|
| Preliminary earnings far better than consensus | Check whether one-off gains (Lesson 15) are mixed in and whether they hold up in the final figures |
| The gap between preliminary and final figures is more than 5% | Find in the notes whether the changed item is revenue or a cost judgment (provisions, inventory valuation) |
| Disclosure of a 30% or more change in earnings structure | Read the reason-for-change box and compare with the final numbers in the March annual report |
| The same filing corrected 2–3 or more times | Check what changed in the before and after table, and record it in the Lesson 34 red flag checklist |
| Designation as an unfaithful disclosure corporation | The reason for designation (failure, reversal, change), penalty points, and past designation history |
This is not always the case. Preliminary earnings and corrected filings only show "when and how reliably" a company's numbers come out. Judge the quality of the numbers together using the financial statements (Parts 3–4) and the audit opinion (Lesson 30). This is educational material and does not recommend buying or selling any particular stock.
Quick checkA company disclosed preliminary operating profit of KRW 5 billion in February, then reported final operating profit of KRW 3.8 billion in the March annual report. What is the difference in percent, and what should you look at first?
It fell about 24%. (38 − 50) ÷ 50 = −24%. Cost judgments may have changed substantially during the audit, so check the key audit matters and profit-related notes in the audit report, and whether a corrected filing came out too.