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To: freeus who wrote (39199)4/27/1998 3:55:00 PM
From: Chuzzlewit  Read Replies (1) | Respond to 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



To: freeus who wrote (39199)4/27/1998 9:06:00 PM
From: Mohan Marette  Read Replies (1) | Respond to of 176387
 
Ref:Cash Flow

Freeus, Like Paul said it is required by the SEC now and you can see the cash flow statement right along with the Income statement and Balance Sheet in the annual report. I hear lot of Money managers when making their assessment of a company go by Cash Flow,this becomes even more important when valuing a foreign company. I think cash flow is a better measurement of a company's financial health than anything else.


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