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Strategies & Market Trends : Employee Stock Options - NQSOs & ISOs

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To: Clarksterh who wrote (36)	6/13/2002 4:08:25 PM
From: rkral	Read Replies (1) of 786

>>But you will find that all of the other reconciliations are to make earnings a smoother version of cash flow. What you are proposing is the opposite - making cash flow smoother than earnings which defeats the whole purpose of a separate earnings statement.<< Clark, where is this "smoothing" concept coming from. Do you have link(s) that would help explain that concept to us (me)? I thought the income, cash flow, and balance statements were supposed to present reality to the shareholder. Smoothing sounds like legal manipulation .. and imho accountants would be foolish to use that term. Now I believe companies do manage earnings. For example, the last time I looked at a plot of GE's earnings (log plot, I think), it was a virtual straight line for many years .. most likely as a result of earnings management. Is this the type of smoothing to which you refer? No accountant here either. Come to think of it, I've been on SI for almost 3 years and can't recall even one person admitting to being an accountant. That seems strange. Have you met any? Ron

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