Help with Balance Sheet of particular company I am analyzing?

I am new to investing and am just beginning my analysis of a company I am interested in. On the Balance Sheet, under Cash & Equivalents, the numbers go from 13million in 2002, to 166 in '03, to 195 in '04, up to 309 in '05 and then suddenly down to 2 in 2006. Also, there were no short term investments until 2006 at which point there were 194. Does this mean anything on the face of it? Or do I need to investigate other items to understand what this means? Please excuse my ignorance, as this is the first company I have tried to analyze. I have researched and read about the different sections on the balance sheet, but I just want to know what something like this actually means. Any help would be much appreciated, thank you!

Well without actually looking at the BS, Statement of Cashflows or Income statement its hard to answer your question knowledgeably.

You stated that there was a drop from 300+ million in 05 in Cash and Equivs in 05 and a rise in Short term Investments up to $200 mill in 06. Seems your boys found a place to invest some of their money, or perhaps the auditors didnt not think some of those Cash Equivalents were actually equivalent and thought it would be better if they where actual classified as ST Investments.

Whats missing is the 100 million. Look and see if the had a jump in their inventory, assets such as property, plant, equipment, see if they had a jump in LT investments. Look to see if they bought some of there stock back. Make sure they didnt loose 100 million last year. You should be able to find where that 100 million went even if its a combination of things. What you need to do is determine if that 100 million went to something thats going to better the comany in the coming year(s).

Best of luck!

Cash and Equivalents is really just their "slush fund". It's cash they have on hand for what ever expenses that might come up. Keep in mind that the statement you're look at is a snapshot in time. It represents the cash on the date of the statement. The day before and the day after could have different numbers, depending on various transactions. The same is probably true of Short term investments - money they put in an account for quick access. I don't think variation in either of those categories means any thing significant.

What could have happened is either they used their cash for an acquisition although, using all cash instead of a mix of cash and stock is not smart. What you should really pay attention to is the Net Income, if Net Income is increasing annually, as well as the Shareholders equity, then it's alright. It's best that the Debt is low and that the cash is consistent.

Look on the Cash Flow Statement. You should be able to tell what happened to the cash from there.