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Chapter 10. Beyond Their Means: Balance ... > The Balance Sheet and Those Beloved ...

The Balance Sheet and Those Beloved Footnotes

So, we know we should look at the balance sheet and see whether the company we may want to invest in is “leveraged” with large amounts of debt. There are, however, two possible problems. First, perhaps we can’t find a balance sheet in the company’s latest quarterly earnings press release. Second, looking at the balance sheet isn’t going to be enough.

Yes, in an era when investors have begun to demand more than just a dreamed-up earnings figure to trade from, many companies are still not issuing full balance sheets and cash-flow statements when they announce quarterly earnings. In October 2002, 24 of the 30 blue-chip companies that make up the Dow Jones industrial average did not break out a separate cash-flow statement in their latest release and a number of the most prominent—including General Electric and Walt Disney Co.—did not include balance sheets either, while others only included selected data such as assets and accounts receivable. Investors are told to wait a few weeks until the company files the full documents with the SEC—by which time the share price may have gone to the moon and back based on the earnings release.


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