Investors often overlook SEC filings, and it is the job of the 10Q Detective to dig through businesses’ 8-K and 10-Q SEC filings, looking for financial statement ‘soft spots,'(depreciation policies, warranty reserves, and restructuring charges, etc.)that may materially impact Quality of Earnings.
Mounting development costs at Boeing (BA-$70.48) for its oft-delayed wide-body 787 passenger jet threaten not only profitability but distract and delay needed R&D for either enhancements to — or replacement of — its best-selling, single-aisle B737. Asset growth will require more than the $10 billion in liquidity on the balance sheet. Ergo, expect 737 development to be financed not from earnings but from illusionary inventory build (”deferred production costs”) and borrowings (more debt). Read More at BNET ….
Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.