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Technology Stocks : Dell Technologies Inc.
DELL 125.75-1.2%11:23 AM EST
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To: freeus who wrote (39199)4/27/1998 3:55:00 PM
From: Chuzzlewit  Read Replies (1) of 176387
 
Yes yes yes!!!!

Finally, someone picked up on this. Cash flow statements are now required by all US companies.

Briefly, here are some of the problems with "profits":

1. A company may recognize items as a sale where the purchaser may not be required to pay for the goods (like Compaq's sales through the channels);

2. A company may use unreasonably low depreciation rates (thay don't match the life of the asset); like LEASCO years ago (now bankrupt);

3. A company may misrepresent the quality of its receivables;

4. A whole bunch of other items too complicated to post here.

Basically, watch out for a major red flag: when deferred income taxes rise very quickly start doing your homework. When cash flow slows but profits accelerate start doing your homework!

TTFN,
CTC
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