Section 5 of 5
Published financial statements:
1. Historical nature Financial statements record past transactions and are not a reliable predictor of future performance. Changing markets, economic conditions (recession, inflation), new products or competitor actions are not reflected.
2. Time delay Prepared after the year-end; by the time they are published they are likely to be at least 3 months out of date.
3. Monetary information only Financial statements only measure transactions that can be expressed in money terms (sales, assets, liabilities). Non-monetary factors that affect performance are not shown:
4. Window dressing Companies may present figures in the most favourable way, which may not reflect the actual underlying financial position.
5. No forward-looking information No information is provided about future markets, planned products, economic outlook or the actions of competitors.
6. Limited comparability Only two years of data are provided; there is no breakdown by product, department or segment.
Potential investors seek a financial return — dividends or capital gains from rising share prices. Future performance depends heavily on non-financial factors that are not captured in the statements. Investors should therefore:
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