John A. Tracy - How to Read a Financial Report: Wringing Vital Signs Out of the Numbers

CONTENTS

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Copyright 2014 by John A. Tracy and Tage C. Tracy All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

The Seventh Edition of How to Read a Financial Report: Wringing Vital Signs Out of the Numbers was published by John Wiley & Sons, Inc, in 2009.

Published simultaneously in Canada.

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Library of Congress Cataloging-in-Publication Data:

Tracy, John A.

How to read a financial report: wringing vital signs out of the numbers / John A. Tracy, CPA, Tage Tracy. 8th ed.

pages cm

Includes index.

ISBN 978-1-118-73584-8 (pbk.); ISBN 978-1-118-73558-9 (ebk); ISBN 978-1-118-73592-3 (ebk)

1. Financial statements. I. Tracy, Tage C. II. Title.

HF5681.B2T733 2014

657'.3dc23

2013035597

LIST OF EXHIBITS

PREFACE TO THE EIGHTH EDITION

When I started this book my new co-author on this edition, my son Tage, was entering his senior year of high school. Today he is a successful business and financial consultant in San Diego. Truth be known, he writes better than his old man. So, it is with great personal pleasure and pride that I welcome my son Tage as co-author on this edition. Hes a chip off the old block. In case youre wondering about his name, it is Swedish and Danish in origin.

At the time the first edition was released in 1980, the Dow Jones Industrial Average hovered around 850 (really!). This most-watched stock market index reached 11,700 in early 2000, and then it abruptly plunged, causing a big dent in my retirement savings. The Dow recovered over the following years, but then dropped again. As I write this sentence the Dow is about 15,000. As J. P. Morgan once said, The market will fluctuate. Millions of individuals keep their money in the stock market, and stock investments are a large part of most retirement plans. Knowing how to read a financial report is as important as ever.

This edition catches up with the major changes in financial reporting since the previous edition. At the top of this list is the movement toward different financial reporting standards for private and small businesses. At the same time, the basic architecture of the book remains unchanged. The framework of the book has proved very successful for more than 33 years. Id be a fool to mess with this success formula. My mother did not raise a fool. Cash flows are underscored throughout the book. This cash flow emphasis is the hallmark of the book.

I prepared all the exhibits in the book as Excel worksheets. To request a copy of the workbook file of all the exhibits, please contact me at my e-mail address: . I express my sincere thanks to all of you who have sent compliments about my book. The royalties from sales of the book are nice, but the bouquets from readers are icing on the cake.

Not many books of this ilk make it to the eighth edition. It takes a good working partnership between the author and the publisher. I thank most sincerely the many persons at John Wiley & Sons who have worked with me on the book for more than three decades now. The suggestions on my first draft of the book by Joe Ross, then national training director of Merrill Lynch, were extraordinarily helpful. The continuing support of Debra Englander over the years is very much appreciated. And Id be remiss without mentioning Tula Batanchiev and Judy Howarth, who have been a pleasure to work with on this edition. They have made the new edition much better than if we had been left on our own. Books are the collaboration of good editors and good authors. We had good editors; youll have to be the judge how good the authors are.