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Strategies & Market Trends : Three Amigos Stock Thread -- Ignore unavailable to you. Want to Upgrade?

To: Sal D who wrote (7184)	7/26/1998 12:38:00 AM
From: milesofstyles	Read Replies (4) \| Respond to of 29382

typical as well as standard in terms of accounting practices. it allows the company to forego an immediate hit to their revenue streams, enabling them to keep returns consistent. i think it is important to know what intangibles consist of and how they are depreciated. take a look at the note2. i think, if there was 20m available for acquisitions and 15m hit the intangible assets, you can see little physical assets being added to the balance sheet. alot of analysts, as i have stated adjust for this. let me give you another example of how assets can be manipulated, i believe...three identical companies a,b,and c have the same exact fundamentals... lets say each has revenues of 100 and each buys an asset at a cost of 10. company "a" chooses not to depreciate the asset but fully expense it. for tax purposes perhaps...company "b" decides to depreciate using a straight line method for 5 years, expensing 2 a year until the asset is used up...company c depreciates the same asset for five years using a more aggressive approach(and there are more aggressive approaches than straight line) and the first yr results in depreciation expense of 3.company "a" now has a bottom line figure of 90 cuz they did not depr. company b has a bottom line figure of 98 using their method, and c has 97. which is the best company to invest in if all the fundamentals were exactly the same? this is how assets can be manipulated by companies to affect bottom lines... milesov