Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

Fantasy Math Is Helping Companies Spin Losses Into Profits
New York Times ^ | 22 April 2016 | GRETCHEN MORGENSON

Posted on 05/01/2016 12:18:04 PM PDT by Lorianne

click here to read article


Navigation: use the links below to view more comments.
first previous 1-2021-35 last
To: Lorianne

Wasn’t this that caused the crash of 1929 and why companies are required to follow certain rules if they want to sell stock publically?


21 posted on 05/01/2016 1:38:07 PM PDT by dhs12345
[ Post Reply | Private Reply | To 1 | View Replies]

To: 1rudeboy
It’s Silly Season.

Sure is, both for the political hackathon and the silly market-bashing article. 

22 posted on 05/01/2016 1:40:57 PM PDT by expat_panama
[ Post Reply | Private Reply | To 15 | View Replies]

To: Lorianne

GAAP is itself more like Law than Justice...


23 posted on 05/01/2016 1:58:40 PM PDT by Paladin2 (Live Free or Die.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Lorianne

24 posted on 05/01/2016 1:59:07 PM PDT by Menehune56 ("Let them hate so long as they fear" (Oderint Dum Metuant), Lucius Accius (170 BC - 86 BC))
[ Post Reply | Private Reply | To 1 | View Replies]

To: goldstategop

“Common Core Math 2+2=5.”

Common Core math is even worse than that. It’s more like :

2 + 2 = racist

- OR -

2 + 2 = 37*15 - 62+7 + 10 +52 - 6y = if it is too hard don’t do it. If it doesn’t make and sense to you, you are a racist.

***

On a more serious note, I was reading about Common Core bridging the way to learning calculus. That’s funny. I mean, I can *see* that, but half the crap they shove down kid’s throats is stuff they’ll learn on their own as they master arithmetic.

Moreover, our schools don’t *need* to teach math this way. They need kids to master the mechanics of arithmetic to thrive. This garbage they’re peddling is nothing more than a way keep kids at the mercy of their teachers and eliminate parents helping their kids learn the basics.


25 posted on 05/01/2016 2:08:49 PM PDT by edh (I need a better tagline)
[ Post Reply | Private Reply | To 7 | View Replies]

To: Lorianne

My business has to borrow money seasonally to meet payroll and equipment costs during the off season. Certain equipment we must have on-hand and in working order through-out the months of frozen earth for emergency reasons (gas line or water line breaks), and certain people we need to be available (and thus on payroll).

Banks used to want our GAAP reports for this purpose. Years ago we noticed our banks began revising our reports, giving them back to us, and asking us to resubmit them.

Our attorneys indicated that this was becoming more and more standard, they weren’t asking us to lie on the applications for seasonal credit, but rather were asking for a different format than we were accustomed to providing. Reason being is that the bankers themselves had to account for the paper they held to their superiors and shareholders, and that data had to be massaged for their own interests.

This all leads me to believe (and I have for some time) that our economy is in much worse shape than even the most prudent economists believe (like the massaged paper on housing before the real-estate bubble), and Trump is right, our economy as a whole (the markets) are in a very inflated bubble.

In short: Figures lie and liars figure


26 posted on 05/01/2016 2:18:54 PM PDT by Bubba Gump Shrimp (Cruz - Fiorina The Outsourcing Ticket)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Soul of the South

Why would you think this involves capitalists or capitalism?

The story is all about the arch-enemy of capitalism... namely the cor poratists.


27 posted on 05/01/2016 2:19:29 PM PDT by spintreebob
[ Post Reply | Private Reply | To 20 | View Replies]

To: M Kehoe
You mean Sarbanes Oxley didn’t fix this?

Grab the smelling salts.

28 posted on 05/01/2016 2:21:49 PM PDT by MileHi (Liberalism is an ideology of parasites, hypocrites, grievance mongers, victims, and control freaks.)
[ Post Reply | Private Reply | To 4 | View Replies]

To: expat_panama; 1rudeboy
The silliness has become comical as it pervades every thread. You can't even discuss gardening or pictures of cats without someone throwing in the obligatory insult. It's no surprise that the subject of financial accounting isn't spared.

The article was interesting but I wonder how much of the complaining is legit. With so many businesses eschewing GAAP, what is the real impact? It's not like any junior analyst on Wall Street can't figure out how they calculate earnings. When investing, I look for well managed companies with products I believe will be in demand for the future. Then I look at the present value of operating free cash flows. No need for GAAP.

29 posted on 05/01/2016 2:52:38 PM PDT by Mase (Save me from the people who would save me from myself!)
[ Post Reply | Private Reply | To 22 | View Replies]

To: txrefugee
A nation that is over $100 TRILLION in unfunded debt is NOT the “richest country in the world.”

Shhhhh....don't squelch their fantasy.

30 posted on 05/01/2016 2:59:54 PM PDT by unixfox (Abolish Slavery, Repeal the 16th Amendment)
[ Post Reply | Private Reply | To 13 | View Replies]

To: Soul of the South

As long as we don’t have to bail them out.


31 posted on 05/01/2016 3:56:31 PM PDT by Lorianne
[ Post Reply | Private Reply | To 20 | View Replies]

To: Mase; 1rudeboy; SkyPilot; Robert DeLong; upsdriver
No need for GAAP.

--which never prevented name-calling in the past.  

This complaint about 'suger-coating' earnings was a big deal years ago so briefings took to down-playing the firm's financial position.   It just made things worse.  What happened is when final earnings reports came out at normal the depressed stock price suddenly soared and the management was accused of price manipulation.  All over again.  Which (imho) is why they're back under attack for the rose colored glasses bit now.

Like you say, we're in the info age and for a long time now there's been no excuse for 'not knowing' something.

Meanwhile for some reason the electorate in general and the FR in particular has gone way off the left end bashing the financial markets.  Ironic, the Dems sing that tune but I honestly have not been able to find a video of Trump in a WallSt-bashing rant.  The big gripe here seems to have been the alleged 2008-2009 bailouts of the capital markets.  They may be whining about TARP which got paid back but these left-wingers won't mention GM where the labor markets got bailed out and never paid back a dime.

 

32 posted on 05/01/2016 6:13:36 PM PDT by expat_panama
[ Post Reply | Private Reply | To 29 | View Replies]

Just taking their cues from the government. When you’ve got a fantasy national economy, you’re bound to have fantasy financial reports from companies.

Mark


33 posted on 05/01/2016 7:43:29 PM PDT by MarkL (Do I really look like a guy with a plan?)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Mase

I think you need GAAP to ensure that the “operating free cash flows” aren’t needed as reserves to cover contingencies that arise - for example, pending lawsuits or similar exposures that could bankrupt a company.


34 posted on 05/02/2016 4:11:55 AM PDT by kearnyirish2 (Affirmative action is economic warfare against white males (and therefore white families).)
[ Post Reply | Private Reply | To 29 | View Replies]

To: Lorianne

In the accounting world, they say is better to be “exactly wrong” than “approximately right”, with the idea being the next accountant to go through the books can match the results perfectly, without making assumptions and approximations.

Where this gets nasty is in evaluating the worth of a company that, say, bought and stored 1 million barrels of oil. If they spent $100/barrel on it, then they can put it on the books for $100M and use it as collateral for borrowing...even though today’s value is closer to $40M. Again, the $100M is easily repeatable, the $40M is not...since it depends on timing.


35 posted on 05/02/2016 1:10:30 PM PDT by BobL
[ Post Reply | Private Reply | To 1 | View Replies]


Navigation: use the links below to view more comments.
first previous 1-2021-35 last

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson