Booyah Breakdown: Debt Uncovered

Do the same exercise for the airline industry, since many of their planes are leased, and you'll probably feel something akin to motion sickness.

Pick Up the Pensions, Please

The pension liability is a joke, too, because we all know now that the pension plans at most companies are underfunded. What's worse, to truly realize how underfunded they are, you again have to dig through the footnotes.

Here's the arcane logic: Since pension assets belong to the employees, in theory, they're not an asset to the company, so the company, therefore, can't record a corresponding liability on the balance sheet.

You will find a pension liability on the company's balance sheet, but it doesn't represent the whole picture, thanks to FASB's logic. You have to read the footnotes for more detail.

It's not uncommon to have a huge pension liability number these days. As an example, say your company has saved $400 million in pension assets. But if everyone retired, the company would need to pay out $900 million. So the company is short $500 million at this time. That's a big fat liability that should clearly be in the balance sheet. But it's not.

The upside is that FASB is expected to issue a statement any day now requiring companies to report the true net pension liability on the balance sheet, says Noll. Hey, it's something.

Get in Balance

At a minimum, read those off-balance sheet footnotes and understand what's out there.

Ideally, you should run a quick debt-to-equity ratio, says Ketz. It's just long-term debt divided by shareholder's equity, and it measures a company's financial leverage. So if the company had to liquidate today, could it pay all its bills? You're looking for a low number.

To get a true ratio, add all the extra debt from the off-balance sheet financing note.

Let's pick on Starbucks again. Just using its balance-sheet number, its debt-to-equity ratio is 0.68. Add in all those leases, and it more than triples, reaching 4.58. And that doesn't include the pension stuff. "Clearly, Starbucks is leveraged more greatly than it admits," says Ketz.

So don't waste your time trying to understand why some items are not in the financials statements and why some kids throw tantrums when their pizza is cold.

Just be smarter and go with it. Carry a calculator and a flask so you can crunch some numbers to understand the real deal and take a swig when the screaming starts to hurt your eardrums.