Footnotes To The Financial Statements

Financial statements aren’t always clear cut. That’s why they come with footnotes.

Footnotes to financial statements aren’t just footnotes you should skip over if you’re bothering to look at financial statements in the first place. Rather than “by-the-way’s,” footnotes to financial statements contain very important information.

For instance, they might include accounting policies and methods, or explain seeming anomalies...things that you’d want to know about if you were doing research as an investor. While the actual financial statement is important too, it’s kind of like the “resume,” whereas the footnotes are the “cover letter” where a company explains themselves to investors. It's usually deeeeep in the footnotes where the juicy things hide, just praying that real investors don't surface the very good...or the very bad...that they proffer.