SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Technology Stocks : Network Associates (NET)
NET 234.89-2.3%Nov 11 3:59 PM EST
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: Chuzzlewit who wrote (4521)3/27/1999 12:30:00 PM
From: Just_Observing  Read Replies (1) of 6021
 
I cannot agree that the SEC accounting changes do not change the picture on true profitability.

Let's consider a hypothetical example with two companies with exactly the same revenues and exactly the same profits - 1 billion and 100 million resp. Now let's say that company A makes an acquisition for 100 million and this company had sales and profits of 100 million and 10 million resp (a similar company one tenth the size). Company A fully writes off this acquisition instead of carrying it as goodwill which is the true cost of the acquisition. Since the cost of the acquisition has been written off, and the number of shares have not been increased, company A shares are now worth 10% more because the company will be earning 10% more per share. Thus, the profitability picture has been changed substantially.

I am not an accountant and since you know so much about accounting, could you please point out what's wrong with the analysis. Thanks a lot.
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News