29 — Wednesday, January 25, 1989 - North Shore News

Deciphering firm’s financial

statements takes some skill

WATCH FOR
MENTION OF
NEW PRODUCTS

IT’S THE fine print that matters. Financial statements are not always
straightforward, so it’s important to read them closely and carefully.

AN INVESTOR reads fi-
nancial statements for much
the same reason a doctor
reads medical charts — each
is trying to get a handle on
physical condition.

And when trying to gauge the
state of a company’s fiscal health,
the best place an investor can start
is with its financial] statements.

Since public companies are re-
quired by law to publish their in-
terim financial statements quarter-
ly, as well as a consolidated state-
ment annually, it is relatively easy
to track a company’s progress over
any given 12-month period simply
by comparing figures.

Consolidated stat statements, more
often than not, are published in
the company’s annual report —
which also gives the company a
chance to blow its own horn,
usually through a glowing message
to shareholders from the president

or chairman.

But watch for any mention of
new products or services —- impor-
tant clues for an investor.

Another important thing to look
for is the auditor’s report append-
ed to the financial statements.

The wording may very slightly,
but in every case it will state that
the auditors have examined the fi-
nancial statements and that “‘in
our opinion they present fairly”
the financial position of the com-
pany at a specific date.

As for the statements
themselves, there are three key
enes to watch for: the balance
sheet; the income statement; and
the source and application of
funds.

Although the figures in financial
staicnents are of prime interest to
investors, you'll find a lot of addi-

tional and useful i

Potential investors will also want
te know about contingent
Babiliti 4

in a specific industry or company.
This erticle contains general fi-
Bancial advice by Canada’s
‘ered .

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