It is also important to analyze the firm's long-term assets. Investors must realize that North American accounting standards value most assets at their historical cost. Thus, increases or declines in long-term assets are not always reflected on the company's balance sheet. In some cases, users must make a decision as to the value of those assets. This requires great judgment and knowledge about the assets and is best left to a professional.
Many companies also carry intangible assets such as goodwill, patents or trademarks.
Thus, long-term assets are very difficult to value. Ratios determining the productiveness of or return on long-term assets are perhaps the best proxy in determining their value. Short-term obligations are a measure of the firm's solvency . The notes to financial statements should also be read to determine if the company has any obligations not included in the balance sheet. Company's will often use 'off balance sheet financing' to ensure that working capital requirements are meet.