Financial data—the financial information about a company—is the simplest to define. Basic financial data is embodied in the company’s audited and non-audited financial statements, its government filings, including its unaudited Management Discussion and Analysis of the financial statements, and supplemental schedules. It’s made available to shareholders in annual and interim reports, and is readily found on the internet and web sites, and for larger companies, in the business and financial media. The proxy statement also answers some financial questions, and reporting services, such as Standard and Poor’s, also supply the information.

The SEC has been increasing the depth of financial data it demands in these documents and some companies themselves have volunteered it. Although there are still important areas of operating information that many companies seem reluctant to disclose—quarterly segment reporting is one example—for a public company there is relatively little financial information to which an interested observer cannot become privy. The corporation that tells less deludes itself if it feels that bad news can be hidden from interested parties. More significantly, the reluctant corporation deprives itself of the opportunity to present the company favorably. It leaves itself open to a serious credibility problem, because most analysts feel that if a company is reluctant to disclose and broadcast information of any nature that’s relevant to understanding performance, the reasons for doing so must be negative. And since most analysts tend to recoil at the least bit of negative information, any attempt to hide anything causes an almost immediate overreaction. Remember, too, that the SEC has been absolutely assiduous in its efforts to increase disclosure despite the damage done to disclosure by the courts serving the claimants’ lawyers in shareholder litigation, and Sarbanes- Oxley demands it. Overzealous litigation led Congress to pass the Private Securities Litigation Reform Act of 1995, the so-called Safe Harbor Bill, late in 1995, which offers protection against litigation for making appropriately qualified projections that are not met.

Despite attacks on disclosure regulations and policies, or any recalcitrance to full disclosure, one overriding factor remains—the more that is known about a sound company the more readily it will be understood, believed, and favorably viewed.

In analyzing a company’s fundamentals, using virtually any process of fundamental analysis, at least the following financial information is essential.