Mindmeld:
You seem to be completely missing basic and fundamental principals of accounting with regard to Cash Flow statements. With regard to the Cash Flow statement, as BOFP and others have mentioned many times, this statement does exactly what it is titled---it measures actual, real cash flows. (OT: On the other hand, the free cash flow item that I have been referring to, is not an actual line item on the Cash Flow statement, and I was proposing a non cash adjustment to FCF to make the final, ending number better reflect the increase or decrease in wealth available to owners.) Back on topic: stock can be granted to employees without any cash moving to and from the company other than the change in taxes.
Further regarding the Cash Flow statement, the non cash items included in Net Income, meaning stock grants that are expensed, depreciation, amortization, etcetera, must all be reconciled with actual Cash Flows provided by Operations. That is why you always see depreciation, amortization and many other non cash items that are included in the Net Income figure, added back to Net Income to arrive at Net Cash Flows provided by Operations. So ignoring tax consequences for a moment, there is absolutely no change to Net Cash Flow from Operations when stock is granted and expensed, because the non cash item that was expensed from net income, the value of the stock grant, is added back to net income to arrive at Net Cash Flow provided by Operations.
That someone who claims to be a CPA, you, is not even aware of the concept of reconciling the non cash items included in Net Income with Net Cash Flows provided by Operations is well beyond belief to me.
Regards, Huey |
