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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Alohal who wrote (59852)	5/19/1999 8:51:00 PM
From: Knighty Tin	Respond to of 132070

Aloha, What I refer to as low quality of earnings has so many symtoms that I can't even get close to listing them all. Some that are popular right now include capitalizing good will during mergers, paying employees with options that do not go through the income statement, stuffing sales channels, selling put warrants, receivables dumps, recognition of revenues and profits on multi-year contracts, understating depreciation, cutting cap spending to make the number, etc. Except for depreciation, which is the fault of the govt., most of the scamming has come into being lately due to the fact that so many mgrs are paid for "creating shareholder value," not for building a business. These two things often correlate, but often do not. The exec who is paid in options has an incentive to put a positive spin on every aspect of the business. Actually, financial reports are less complex than they used to be. There has been a lot of good work done in reducing and cleaning up the reports.