Preface

• Author: Vern Krishna
• Pages: 27-30

xxvii

Preface

Accounting is the forbidden fruit in the garden of business, which, if

eaten without appreciation of its ingredients, can lead to unfortunate

consequences for investors.

All commercial arrangements have nancial implications. Profes-

sionals and businesspersons need to understand nancial transactions.

Lawyers draft contracts; managers and employees enter into compen-

sation agreements; family lawyers negotiate matrimonial settlements.

Civil litigation is essentially dispute resolution about monetary claims

in which one party receives, and the other pays, compensation. Liti-

gation lawyers carry the burden of persuasion to advise judges on the

nancial consequences of their legal positions.

Investors need to appreciate nancial jargon that they are asked

to sign o on by their investment advisors. For example, on  July

, Apple Inc announced a -for- stock split for its shares, which

were trading at $ per share. On  August, all investors who

owned Apple’s stock received three additional shares for each share

held, which began trading on a split-adjusted basis on  August. e

new price for holders would be around $ on a split adjusted basis.

is was Apple’s fth stock split since it went public. It also split on a

-for- basis on  June ; a -for- basis on  June ; and on a

-for- basis on  June . In contrast, Warren Buett’s Berkshire

Hathaway has never split the price of its A shares, which on the same

day were trading at around $,. Why did Apple Inc split its