Accounting

Accounting

Postby winston » Mon Dec 10, 2012 1:46 pm

Hong Kong Exchange clamps down on accounting practice under fire at Olam

SINGAPORE, Dec 10 (Reuters) - Hong Kong Exchange is prohibiting companies that seek approval to list on its stock market from relying on an accounting practice at the centre of accusations by short-seller Muddy Waters against Olam International Ltd .

Olam, a commodities company listed in Hong Kong's rival financial centre Singapore, has been criticised by Muddy Waters, for the way it accounts for assumed future increases in the value of its crops and other so-called biological assets.

Olam has said its accounting is in line with Singapore's financial standards, which are based on IFRS rules and insist that agricultural assets are valued according to certain models.

Analysts have noted that biological gains make up an especially large portion of Olam's pretax profit.

However, Hong Kong Exchanges and Clearing Ltd <0388.HK> seems to be taking a different view on the practice from its Singapore rival.

In a guidance note released on Friday, the bourse said agricultural companies could not rely on "unrealised fair value gains on valuation of biological assets" to demonstrate a trading and profitability track record, as required for approval to list shares on the exchange.

In practice that means a cattle farmer, for example, who buys young calves at a certain price cannot make an assumption on how much their value will increase as they mature but must wait until they are actually sold before booking a profit.

The guidance does not, however, apply to companies already listed on the exchange which count on assumed gains in biological assets in their reported profits.

"Biological assets are subject to inherent risks and their valuation is usually subject to higher uncertainty due to complex and not easily verifiable assumptions adopted," the exchange wrote in its note.

"Allowing an applicant engaging in agricultural activities to use unrealised fair value gains on valuation of biological assets to fulfil the trading record and profit requirements is contrary to the principles of the Listing Rules."

The Hong Kong exchange requires companies listing on its market to have a trading track record of at least three years, and to have recorded a profit of at least HK$20 million ($2.6 million) in the latest year and at least HK$30 million in the first and second year combined.

Olam's shares have fallen around 15 percent since Muddy Waters first criticised the company. It has sued the short-seller in a Singapore court and issued a detailed rebuttal of the allegations.

Source: Reuters
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Re: Accountants

Postby winston » Sat Apr 09, 2016 11:04 am

Hard To Believe Folks, But Government Accounting Is Fraudulent…

By George Washington

The Pentagon hasn’t even attempted to comply with government audits … and “$8.5 trillion in taxpayer money doled out by Congress to the Pentagon [between] 1996 [and 2013] has never been accounted for.” The military wastes and “loses” trillions of dollars.


The Bureau of Labor Statistics fudges the numbers to make unemployment look lower than it is really is. BLS itself has admitted that its “adjustments” skew unemployment data during recessions. In


The government has long ignored energy and food prices when reporting on inflation


The former U.S. comptroller general says the real U.S. debt is closer to about $65 trillion than the oft-cited figure of $18 trillion.


But Laurence Kotlikoff says that – when unfunded liabilities are taken into account – the fiscal gap for the U.S. is actually 3 times higher … $205 trillion as of 2013 (and getting worse all the time).


Source: Tyler Durden

http://www.thetradingreport.com/2016/04 ... raudulent/
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Re: Accountants

Postby winston » Sat Feb 11, 2017 8:27 pm

How to Read an Income Statement

By Samuel Taube

Source: Investment U

http://dailytradealert.com/2017/02/11/h ... statement/
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Re: Accounting & Accountants

Postby winston » Tue Feb 21, 2017 7:16 am

Companies Confuse Investors With Incomplete Quarterly Earnings

By Steve McDonald

Ford’s most recent quarterly announcement was described by analysts as one of the most unclear to date.


Netflix has been described as one of the worst offenders of this kind of confusion. Its recent report was so confused, its stock moved 10% before the news services were even able to report its most recent earnings numbers.


United Technologies added a new level of confusion by reporting earnings in such a way that investors had to do their own math to get to net earnings. No one does that!


The SEC has sent 71 comment letters, wrist slaps for noncompliance, since last May. They’ve gone out to companies like General Electric, Coke, Hertz, Medtronic, Whirlpool, Tesla, Conoco Phillips and many more.


Watch yourselves. As retired investors, we can’t afford major mistakes because of deceptive reporting. Make sure you know which number you’re reading.


Source: The Oxford Club

http://wealthyretirement.com/slap-in-th ... ?src=email
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Re: Accounting

Postby winston » Wed Aug 08, 2018 8:06 pm

Balance Sheet

Among the three main financial statements, this one gives a snapshot of a company.

It shows what a company owns (assets), what it owes (liabilities), and the difference between those two numbers (net equity).

All else equal, you'd want to invest in a company with a larger asset base, fewer liabilities, and, therefore, a greater net equity value.

The balance sheet is sometimes called the "stock" statement, in that it takes stock of what a company owns and owes at a moment in time.

Source: Daily Wealth
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Re: Accounting

Postby winston » Wed Aug 08, 2018 8:09 pm

Income Statement

It measures how well a company is performing...

It tells you how much business a company generated (its revenues) and subtracts from this what the company spent (its expenses). The net result is its profits, or net income.

Again, all else equal, you'd prefer to invest in a company with higher revenues, lower expenses, and, therefore, higher profits (and a higher profit margin).

However, many investors miss one key nuance about the income statement. Many of its line items are smoothed out (or shown on an "accrual" basis), rather than shown on a true cash basis.

This is partly to account for large, lumpy items that may not occur every period but represent an ongoing part of the business.

For instance, consider a software company that sells three-year licenses to its software. It gets the cash up front, but it provides services (and incurs expenses) over the course of those next three years. If the company recorded all the revenues in year one, this would overstate ongoing profits in that year, and then understate profits in years two and three. So instead, the income statement books the revenues in the period in which it's earned, not when the cash is received.

Smoothing this and other lumpy items out allows us to compare a company's performance from period to period. As investors, we want to see not only how well a company performed this year, but also how that compares with previous years.

This also gives us rate-of-change information that can be even more important than the absolute number itself...

For example, look at tech companies Xerox (XRX) and Nvidia (NVDA). Both companies booked roughly $10 billion in revenues last year. But Nvidia's market capitalization is more than 20 times larger than that of Xerox. Much of that is due to Nvidia's 40%-plus revenue growth, versus Xerox's 5% revenue decline last year.

Source: Daily Wealth
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Re: Accounting

Postby winston » Wed Aug 08, 2018 8:17 pm

Statement of Cash Flows

The cash flow statement shows how much actual cash a company generated over a given period.

Of course, numbers might jump around from year to year – for example, if a company spends a lot one year on a new factory and nothing the next year. But at the end of the day, the more cash a business generates over time, the more valuable the company is.

The statement of cash flows is also the quickest and best way to determine a company's free cash flow ("FCF"). Free cash flow is what's left after the company pays for all expenses and outlays. That makes it a great measure of the excess cash a company generates... which it can use to enrich shareholders through dividends and buybacks, or to invest in growth.

When you want to calculate a company's FCF, go to the statement of cash flows. Take the "net cash from operating activities" and subtract the capital expenditures.

Again, the higher this number (and the higher FCF as a percent of revenues), the better, all else equal.

Source: Daily Wealth
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Re: Accounting

Postby behappyalways » Sat Mar 30, 2019 6:08 pm

Perpetual securities are debts, not equity. Here's why
https://www.theedgesingapore.com/portfo ... -heres-why
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