• Create BookmarkCreate Bookmark
  • Create Note or TagCreate Note or Tag
  • PrintPrint
Share this Page URL
Help

Chapter 6. Growing Mushrooms: The Art of... > Red Flag 2: A Press Release Begins w...

Red Flag 2: A Press Release Begins with a Questionable Measurement of Profit

The announcement that starts with a measurement of profit that is not clear, such as “pro forma,” “operating,” “as reported”, “normalized,” or “core,” should be treated with skepticism. If you are to give these figures credibility, the company has to be immediately frank about what it has taken out to reach the calculation. Too often, companies have stripped away key costs and important one-time losses so that you are left with EEBS, or EESU, earnings excluding bad stuff or earnings excluding screw-ups. A bank doesn’t send its customers statements that only highlight the credits—and neither should a publicly traded corporation. While new SEC rules will force companies to match “pro forma” figures to net profit figures, there is no guarantee that the press releases will be much clearer.


PREVIEW

                                                                          

Not a subscriber?

Start A Free Trial


  
  • Creative Edge
  • Create BookmarkCreate Bookmark
  • Create Note or TagCreate Note or Tag
  • PrintPrint