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Footnotes

The detailed disclosures behind the headline statements, where accounting policies, estimates, segments, debt terms and commitments are actually explained.

The three statements are four pages; the notes are sixty. Almost everything that distinguishes a careful analyst from a screen-reader is in the notes: the inventory split, the debt maturity ladder, the revenue disaggregation, the estimate changes.

Read them in order of the money involved, and read the same note across three years side by side. Changes in wording are usually more informative than the numbers themselves.

Example: Northwind's notes reveal a change in warranty reserve assumptions worth $6M of pre-tax profit, disclosed in a single sentence that never appears in the press release or the earnings-call.

Related: form-10-k, earnings-quality, segment-reporting, related-party-transaction, auditor-opinion

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