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Related party

A person or company with close ties to the reporting company, such as an investee it partly owns, a big owner, or a director. Deals between them may not happen on normal market terms, so the 10-K has to disclose them: what was bought and sold, and what is still owed.

Simple example

A software company owns 30% of a startup, and the startup buys $50 of cloud services from it. The software company must report that $50 as related-party revenue, plus anything the startup still owes it.

Companysells cloud servicesStartup30% ownedowns 30%pays $50The 10-K must disclose the $50 and what's still owed
Made-up numbers, for illustration only.

Related terms

Equity methodHow a company accounts for a big minority stake in another business.Customer concentrationHow much revenue depends on a few big customers.10-K (annual report)The annual report US companies file with the SEC.