Comments on: Creative Accounting!

By: vivi

vivi — Mon, 13 Sep 2010 14:20:32 +0000

Christian Louboutin Eugenie Red Satin Platform Pump
Christian Louboutin Eugenie satin pumps
Christian Louboutin fire patent leather ‘Lola’ pumps
Christian Louboutin Floral-Print Chiffon Pump
Christian Louboutin Fred leather lace up flats
Christian Louboutin Gabin 140 platform pumps
Christian Louboutin Garnet Velvet Round Toe Satin Bow Pumps

By: CPA Exam Review consultant

CPA Exam Review consultant — Wed, 01 Apr 2009 20:52:23 +0000

Sadly, the banks needed a scapegoat and found one in “obscuring the details” as others have said. This doesn’t make the problem go away, and in fact it will exacerbate the issue as it will either resurface later as a new issue or continue to chew away at balance sheets like the cancer it is. To say nothing for regulation, which is about to take a beating, and allowing moral hazard in cases where fiscal sanity and risk management should be first and foremost.

It is truly a mess.

But it’s beautiful that you feel that way about your wife

By: Ellen D

Ellen D — Sun, 29 Mar 2009 03:57:46 +0000

Thank you, Larry. I concur and I think this is very dangerous.

Here is part of my e-mail to the fasb.

Getting rid of rules and regulations started this mess. If you do this, no one can trust the U.S. financially any more.

Stop this madness.

They are going to change the rules next week. Please e-mail the director (below) to voice your opposition. We have until April 1 for public comment.

director@fasb.org

Apologies if typos – Earth hour.

By: P3

P3 — Sun, 29 Mar 2009 00:09:06 +0000

The debate between “net income” versus “comprehensive income” is an old debate. Both measures have various degrees of merit and issues. The devil is typically in the details – and in knowing what each measure really means.

By: Linda C.

Linda C. — Sat, 28 Mar 2009 23:50:30 +0000

Enron is still with us. I remember after the Enron scandal broke multiple business revised their previous earnings statements downwards. I guess we still have magical accounting.

One really can’t trust any information these companies are putting out anymore.

By: LD

LD — Sat, 28 Mar 2009 23:41:48 +0000

Ellen…I am not a fan of changing the mark to market. I view a change as a means for banks to “manage” losses as in hide or disguise them as opposed to identify them and make sure they have enough capital to support them.

For a handful of assets a relaxation of the mark to market does make sense because transactions are very infrequent. However an across the baord change in the mtm is an accounting trick to manipulate the books.

I think it increases the risk in potentially investing in the banking industry. How can you invest if you do not knwo what assets are marked at.

There are markets for assets the banks just do nto want to transact at those markets because the bank would be insolvent if they did.

By: Ellen D

Ellen D — Sat, 28 Mar 2009 22:09:08 +0000

Hi Larry. What do you think of the proposed mark-to-market change in accounting rules to make the banks happy? If you’ve answered this before, sorry. I don’t get a chance to read everything.

By: WMCB

WMCB — Sat, 28 Mar 2009 21:58:08 +0000

Larry, your posts are wonderful. I don’t comment often, because frankly I often don’t have a lot intelligent to say. But I do read them, and appreciate what you do.

By: foxyladi14

foxyladi14 — Sat, 28 Mar 2009 21:25:21 +0000

i learn a lot here.thanks D.L

By: LD

LD — Sat, 28 Mar 2009 18:46:31 +0000

Franklin and his cronies were the MASTERS!! They had bought off the crowd on the Hill in the process.

By: I'm a Linda too

I'm a Linda too — Sat, 28 Mar 2009 17:48:18 +0000

Auh yes, MASSAGING the books. Wasn’t Franklin Raines of Fannie Mae doing this…mmmm about a decade ago?

By: Cubs in 09

Cubs in 09 — Sat, 28 Mar 2009 17:40:45 +0000

Thanks! I’ll bookmark that page. That’s easier than googling every technical phrase and trying to understand the definition—which is often full of technical concepts. This leaves the head of the uninitiated spinning.

By: LD

LD — Sat, 28 Mar 2009 16:54:38 +0000

Peggy Sue….makes one wonder about the real foundation of a lot of companies.

Very interesting color.

Thanks for sharing.

By: Peggy Sue

Peggy Sue — Sat, 28 Mar 2009 16:45:48 +0000

According to my husband this has been going on for years. He worked in Public Accounting when he first graduated from college, always liked crunching numbers, but quickly realized that it wasn’t about the numbers or what they told you. It was all about the narrative you could create around the numbers.

We had this conversation last week after I read Weil’s article: “Accounting Brothel Opens Doors for Bankers’ Fiesta.”

I thought it was appalling. My husband wasn’t surprised. “And that’s why,” he said, “I had never had a future in public accounting. I’m a numbers guy. I wasn’t any good at fiction writing.”

Depressing.

By: LD

LD — Sat, 28 Mar 2009 16:43:28 +0000

The P/E is exactly as you state. A P/E can be for a specific company, an industry or an entire index (companies included in an index). The price of the stock we can get in daily market trading. That price implies a level of earnings and the “multiple” paid for those earnings.

As Weil points out, the manner in which those earnings are determinee is not only critical to the process , it IS the process.

A fair multiple is typicallly anywhere from 12 to 18. If earnings, as defined by net income in weil’s piece, are used and we see where the S&P 500 is trading (815) it would imply a multiple of 25!!!

What does that tell us? the market is currently VERY rich or expensive. Earnings need to go up or prices of the stocks need to come down or both.

For what it is worth, a wealth of these financial topics and definitions are included in an Investing Primer at Sense on Cents. I will embed it here.

http://www.investopedia.com/rotate.aspx?invsection=home&backurl=http%3a%2f%2fwww.investopedia.com%2f