Posted by student ac on Friday, October 19, 2007 at 7:59pm.
This is a matter of opinion. With all the creative bookkeeping, unreliable accounting and writeoffs of losses going on these days, and the debacle of Enron, there isn't much in a balance sheet that one can trust. Assuming that liabilites are a small fraction of capitilization, I consider earnings to be the best indicator for some companies, and FFO (funds from operations) from others. Some accountants believe that Return on Assets Employes (ROAE), expressed as a percent, to be the best indicator of corporate health.
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