What are the differences between MD&A and footnotes that we need to know w.r.t. L1, as in, if a question asks us to determine whether something would appear in MD&A or Footnotes, how do we do it?
MD&A is an explanation of what happened last year (“Our suppliers were on strike, our customers lost their jobs, high interest rates killed us . . .”) and what they think will happen in the future (". . . but next year we’ll triple our sales and double our profit margin and pay a huge dividend.").
The footnotes explain the numbers in the financial statement. (“We’re using DDB depreciation with an average life of 10 years and an average salvage value of 10%. Our LIFO reserve increased by $2.3 million and is now $18.4 million.” And so on.).