To: Don Lloyd who wrote (83188 ) 8/21/2000 9:30:27 PM From: Bilow Read Replies (2) | Respond to Hi Don Lloyd; It is an old principle of accounting that purchases and sales of the corporations own stock do not show up on the profit and loss statements. So when corporations do something that involves sale or purchase of stock, you have to be very careful how it is accounted for. I came across my old copy of Meigs & Meigs, and can now quote from a freshman accounting book something to that effect.permanently diverge, at least in terms of some definitions of cash flow. But even if we assume that as factual, it does not imply that valid measurements for cash flow are also valid measurements for earnings. Earnings have to be calculated for a very specific period, i.e. 1Q95, 1997, fiscal 2001, etc. One of the attributes of cash flow, on the other hand, is that companies can borrow money, for instance, and create an increase in this year's cash flow and a corresponding decrease in cash flow for some later year(s). Selling stock creates increased cash flow, but it does not create earnings. Accountants have always distinguished between these two things, and with very good reasons.
