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At 11:53 PM -0400 9/26/01, Mike Higgs wrote:
>It's earnings, earnings, earnings.
... which are manipulated, manipulated, manipulated.
In a business course once, the head of a major auditing firm was a
guest speaker. He told us that Professor X had taught us this and
Professor Y had taught us that and now he was going to tell us how it
REALLY worked.
He created the "hypothetical" situation where the head auditor meets
with the Chairman of XYZ SuperCorporation and the Chairman "suggests"
that he would like to show 47 cents a share for this quarter. Are you
going to tell him that such a number is impossible and probably lose
a major client? Not likely.
So you go to work and recalculate everything every possible way to
see how you might achieve 47 cents a share, within the rules of
Generally Accepted Accounting Principles, of course. There is
tremendous flexibility often resulting in a two-to-one range of
acceptable profits.
Then, sometime within the next few quarters there is some so-called
"non-recurring event" on which you can blame all sorts of stuff.
Then you write off all the questionable assets (and a lot of good
ones, too) so that you can show great profits in the future.
It would not be a great exaggeration to say that, "Any similarity
between reported quarterly earnings and real earnings is purely
coincidental..."
Bob Fulks
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