The primary focus of investors can be summarized by one word: returns. Namely, investors would love to know how much of a return they will make on the capital they invested in a given investment. Of course, this is all but impossible in practice. Instead, investors often must settle for looking back at the returns [...]
These three words are used to describe different financial concepts, from a belief that cash is more valuable than other investment tools to an emphasis on cash in analyzing businesses to the importance of cash flow for the overall health of a business.
In our most recent issue, we highlighted how M&A accounting violates the matching principle and misrepresents economic reality by consistently underreporting the profitability of an acquired company. This causes multiperiod distortionsin the acquiring firm’s income statement.
When I teach advanced accounting to up-and-coming future accountants, I have to tell the students to just memorize GAAP rules and do what the standards tell them to do.
Professor Baruch Lev is one of the foremost academic experts when it comes to analyzing the impact of deficiencies in corporate financial reporting.
Last month, we highlighted Warren Buffett and his distaste for GAAP and IFRS accounting standards. This month, we turn to another all-time great value investor the co-founder of legendary hedge fund Baupost Group, Seth Klarman—for his take on financial reporting deficiencies in general and the focus of this month’s report… inflation or more accurately, currency [...]
When Warren Buffett talks, his comments are worth listening to. And if you were not already aware, Buffett has said a great deal about problematic accounting standards.
I recently had a wonderful conversation with Ralph Nach. Ralph is a former co-author of the Wiley GAAP Guide. He teaches continuing professional education courses for practicing CPAs on many of the most difficult and complex accounting topics. Ralph was also one of the very first members of the UAFRS Advisory Council for Uniform Accounting.
Whitman built impressive investment results over decades. While he accomplished this feat, Whitman also found time to call out the problems with as-reported financial statements under GAAP.
No industry is free from the inconsistent rules of GAAP accounting that create extensive distortions from economic reality. In this issue, we highlight a chemicals company, a payroll servicer, and a diversified industrial conglomerate. Everything from net earnings to total assets is calculated in ways that seem almost arbitrary under Generally Accepted Accounting Principles.
