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. He’s a chip off the old block. In case you’re 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. I’d be a fool to mess with ...