20 BASIC QUESTIONS, BASIC ANSWERS
Some years ago, a women’s investment club invited John to their monthly meeting to speak about financial reports. It was a lot of fun. These women were a savvy group of investors who pooled their monthly contributions. They invested mainly in common stocks actively traded on the major securities exchanges. Our comments in this chapter apply to public corporations as well as private businesses.
These women investors asked thoughtful questions, which we share in this chapter, along with a couple of other questions that are important for anyone who invests in stock and debt securities issued by public corporations, or who has an investment in a private business. Other financial statement readers will also find this chapter helpful.
Business investors and lenders should know the answers to certain questions concerning financial statements. We answer these questions from the viewpoint of a typical individual investor, not an institutional investor or a professional investment manager. John’s retirement fund (TIAA) manages almost $1.0 trillion in investments. We assume its portfolio managers know the answers to these questions. They’d better!
When You Buy Stock Does the Company Get Your Money?
One point caught John quite by surprise, and it’s an important one to understand. At that time, the women were thinking of buying common stock shares of General Electric (GE). Two members presented their research on the company with the recommendation to buy ...
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