Financial Warnings

"Equity investors, or those who advise others on making equity investment decisions, place considerable reliance on earnings expectations."

"Central to the avoidance of an earnings surprise, or any other form of surprise, are early warning signs or indicators."

"Because a corporate restructuring can help reduce inefficiencies, future earnings may also benefit."

"The application of generally accepted accounting principles leaves much room for judgement and the reporting of different results in similar circumstances."

"Since [bank lenders] are frequent users of financial statements, we felt it was important to learn from them what early warnings they found to be helpful in avoiding earnings surprises."

"The employment of an analyst's time to explore the early warnings is costly."

"A reported earnings series must be purged of the effects of any revenue gain and expense or loss that are _nonrecurring_ in nature."

"The more reliable such forecasts become, the less the likelihood that frequent earnings surprises will result."

"The careful financial statement reader will take steps to assess the likelihood that revenue is not overstated."

"The longer the life, the smaller the annual expense amount becomes."

"Managements have awakened to the availability of derivatives such as swaps, options, futures, and the like, and have embraced them."

"There are limits to how far these account balances can go."

"Investors and creditors should be aware that when earnings are managed, up or down, a company may not be reporting its true performance."