Berkshire Hathaway (NYSE:BRK-A) (NYSE:BRK-B) recently reported strong earnings, but the headline earnings-per-share number doesn't tell the whole story.

In this Industry Focus: Financials clip, host Shannon Jones and contributor Matt Frankel discuss why Berkshire's earnings number is deceiving and what metrics investors should focus on instead.

A full transcript follows the video.

This video was recorded on Aug. 6, 2018.

Shannon Jones: Let's actually dive into Q2. How exactly did they perform? Just to give our listeners perspective, Berkshire always puts up a pretty impressive showing, for the most part. Particularly this time, rebounding in areas that did take quite a bit of a hit over the last year. But, it wasn't exactly an apples-to-apples comparison this quarter vs. the year prior. That was mainly due to an accounting rule change. Matt, what can you tell us about that change and how it impacted earnings this particular quarter?

Matt Frankel: For the quarter, Berkshire earned about $4.87 per share. By the way, I'm talking about the class B shares, since that's what most people listening own. I don't own any A shares, I don't know about you.

Jones: Me neither. [laughs]

Frankel: [laughs] Maybe someday. $4.87 per share is almost triple what it earned the same quarter a year ago. But, the accounting rule change you're referring to is, now Berkshire has to include unrealized profits from its stock portfolio, which, as we mentioned, is pretty massive, in its earnings total. So, if its stocks go up in value, that makes it look like Berkshire earned a lot more than it did. That was the case for the second quarter, even though it hasn't actually made anything unless it decides to sell those stocks. On the other hand, if its stock portfolio has a particularly bad quarter, which has happened in the past, it can look like Berkshire posted a big loss on paper -- that actually happened in the first quarter -- even though it didn't actually lose any money. Berkshire itself tells investors the past couple of quarters that its earnings number is pretty meaningless.

To really get a sense of how it's doing, you need to go a little bit further. I'll run through its main ways of making money. Its insurance revenue, just from collecting premium income, was up 14% year over year. Its railroad, utilities, and energy revenue, which is another one of its big, core businesses -- I mentioned to BNSF Railroad -- was up 11% year over year. Its services and sales revenue, which is pretty much everything else, was up about 6% year over year. So, its business grew very nicely, it just wasn't the nearly tripling that its earnings would make it seem.

Jones: Great point. For shareholders, for investors, for anybody following Berkshire Hathaway, it's important to keep that in mind, especially moving forward when they report out earnings. As you saw this quarter and even last, it can certainly distort the way that the company itself is actually performing.

Really, overall, a stellar quarter across multiple business segments, as you discussed. Particularly in the insurance business, which did see a pretty nice rebound considering the massive losses that it incurred over the past year. But, there's really one figure that stays on the mind of just about every Berkshire shareholder and investor, and that's that $111 billion in cash. That's right, $111 billion in cash on the balance sheet.