It's time for Crisis at a Glance!!!
When companies put out quarterly earnings, they use GAAP, Generally-Accepted Accounting Principles.
That sounds like a vague sort of guideline but really it's a pretty specific set of rules. But a growing number of companies also offer their own way of accounting. They dial out severance pay or legal bills, arguing that these are one-time costs.
But this “Adjusted Profit” always seems to make the profit better. And in one out of five cases, 50% bigger or more.
The Associated Press confirmed this and then sought comment from analysts, who made two points.
The first is that companies get away with this because analysts let them get away with it. The second is, the more false optimisms they spin, the more their stocks will fall in the next downturn.
Which brings this to the somewhat ominous conclusion of another, Crisis at a Glance!!!
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