"You like to watch?" said Allison.

There was a vaguely pitying look in her eyes, but she was also intrigued. Did The Bug (she was one of the ones who was fond of calling Charles 'The Bug,' behind his back) really watch "As Passion Swells" every weekday at noon?

"Yeah," said Charles, with finality. "I think she's a sucker for wanting him, though. Look what he did to Deirdre."

"I swear to God," said Allison, her eyes and face lighting up in such a way that her lips seemed to swell as well, and Charles's heart literally skipped a beat, and he felt faint, and heard a buzzing in his ears, at least until he realized that the buzzing was the hissing of the fax machine.

"How do you get to watch it? You're stuck at your desk, and you don't have a Watchman like I do," she said, alarmed.

"I've got a cable hookup to my computer."

"You can see the TV on your computer?" asked Allison, excited, and further alarmed, this time because she might have overlooked some technological advance that had a direct bearing on her life.

"It's pretty easy. You just hook up the co-ax to the serial port with an adapter, and then do the setup.exe."

"Charles!" boomed a voice from across the floor. It was Pecunia. "Your customer is talking to you!" Pecunia turned up the speakerphone, which now blared halfway across the office, distorted.

"So I should buy stocks of companies that have the highest assets?" said Mrs. Petruno through the speakerphone.

"No," yelled back Charles, aware that he was going to exercise some informational muscle here, and right in front of Allison. "The ones with the highest stockholders equity, because you have to consider liabilities as well as assets."

"And the balance sheet tells me all about the assets a company has?" screeched the speakerphone.

"Yes," said Charles, with a wink at Allison.

"Why're you winking at me?" said Allison, confused. "Is that not true?"

Well, dear reader, is it or isn't it? Which of the following statements is false?

1) Many important assets do not appear on balance sheets.

2) Balance sheets show all of a company's assets.

3) The balance sheet does not show the values of many of the assets that appear on it.

4) The balance sheet is only one financial statement that an investor should read.

The answer is that #2 is false. Balance sheets do not show all assets, only those *owned* by the company and, generally, for which the company has paid.

Thus, assets that a company has, but does not own, do not appear. Microsoft does not own Bill Gates and cannot compel him to work, though he is surely MSFT's most important asset. We know from previous BTTs that such assets as great management, brand superiority, and technological prowess do not appear on balance sheets. The accounting principles of objectivity and conservatism prevent recording the value of the Coca-Cola trademark, which is surely worth billions. If another company bought the Coca-Cola trademark, the cost would appear as an intangible asset on the buyer's balance sheet.

The other principal financial statements, the income statement and statement of cash flow are also very important, perhaps more important than the balance sheet.

Charles looked down to see that the fax machine was chewing up the balance sheet that he was sending to Mrs. Petruno.

Allison giggled. Charles did not find this at all funny. He was incensed. But, as was his custom, he let nothing show. He did, after all, have plans for himself and Allison.

Balance sheet information provided by Joe Louderback.

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