Download Financial Fine Print: Uncovering a Company's True Value by Michelle Leder PDF

By Michelle Leder

Thirty-five million person traders jumped into the inventory marketplace for the 1st time in the course of the overdue Nineties with no asking questions about the shares they have been procuring. whilst the bubble burst and the massive variety of accounting scandals started to develop, so much traders didn’t recognize the place to show or whom to belief. Now it has turn into extra vital than ever for traders to take issues into their very own hands.Financial advantageous Print: Uncovering a Company’s real worth shall we person traders in at the secrets and techniques that professional specialist traders use once they review a possible funding. Buried deep in a company’s quarterly (10-Q) and annual (10-K) reviews are the true clues to a company’s monetary wellbeing and fitness: the footnotes. At many huge businesses, those footnotes can run for greater than 30 pages and for a few agencies have doubled some time past 5 years, making them just too very important for traders to ignore.Financial nice Print spells out precisely what traders have to search for in the footnotes of a company’s studies so one can make greater, extra knowledgeable judgements. through the use of a number of examples of exact footnotes that experience seemed in SEC files, the publication teaches traders in easy-to-understand language how one can spot – and steer clear of – destiny Enrons and Worldcoms (and Tycos and Adelphias and HealthSouths). For any investor who has spent the prior 3 years gazing their investments cut down and has all started to consider getting again into the industry, this booklet offers the severe instruments that traders want to know to prevent getting burned once more.

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Yet by reading the relevant parts of the Accounting Policies footnote and looking for any changes from a previous quarter or year, savvy investors may be able to pick up on a potential problem before it becomes a more substantial one. Between 1997 and 2002, the number of companies restating their financial results more than tripled, according to the federal General Accounting Office (GAO), which also found that the RED FLAG Be particularly wary of companies that recognize revenue when items are shipped or use percentage of completion, an accounting term often used on long-term projects.

Unlike American investors, who get access to a company’s year-end financials weeks and sometimes even months before an annual meeting, Neuville says that French shareholders typically are given the information the day of the meeting. This all but ensures that shareholders won’t be able to ask corporate executives tough questions at the meeting based on the information in the report, Neuville says. Quarterly information, she says, is even sketchier—generally a few headline numbers that appear in a business newspaper or are available online.

As with Vivendi, many of the companies that have been tarred by accounting scandals in recent years—Enron, WorldCom, Adelphia, Tyco, and HealthSouth—all provided numerous clues in their Securities and Exchange Commission (SEC) filings. Of course, individual investors were not the only ones who missed these hints. Mutual fund managers, analysts, and accountants very clearly 39 Financial Fine Print missed many of them too. Fidelity Investments, for example, had a huge stake in HealthSouth when that company blew up in March 2003.

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