Accounting

 

The Business Roundtable, an organization representing Fortune 500 CEOs, is at the heart of the Economic Elite’s power center.

The Business Roundtable: The Most Powerful Corporate Business Club Most Americans Have Never Heard of
David DeGraw, Amped Status
Fri, 12 Mar 2010 08:00:01 GMT

 

As I have previously explained in my financial analysis of the global economic system, in addition to my economic fact sheet below, the American market system lost approximately 0 trillion of market value during the third business quarter of 2009.  And as I have already explained in previous Journal articles it’s going to take about a year for that 0 trillion of loss to be able to make its way through the entire American market system.  So this of course is setting up the American market system for a second crash, which very well may take place within the next 12 to 15 business quarter’s.

That being said, the business Roundtable.  It is a way for the wealthy to try to keep control of the money they have amassed and to make sure that regardless of any political activities or anything else that happens in this country that they will not have to give up their money.  And as I’ve already explained, this kind of psychotic irresponsible behavior on the part of the wealthy is what is ruining the American economic system and the global economic system.  Because you have these companies having to pay out such large packages for compensation for their upper-level management and executives that their compensation packages are now extremely inflationary.  Furthermore, as a result of these huge compensation packages these companies have had to readjust.  The cost of their goods and services so that they can get more money into their company as quickly as possible which means that the pricing of their goods and services has had to go upward in order to attract more of the wealthy and upper class as their customers.  And that’s so that these companies can continue to get as much money into their company as possible.  But because the upper class and the wealthy customers don’t I as often, these companies that are engaged in this practice end up without having as much cash on hand as they would like because the wealthy just don’t buy is often which means they are not providing these companies with a steady day-to-day cash flow.

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Inside the TV Wars: Mergers, Monoliths and Shady Backroom Deals

Our media powerhouses aren’t ready to evolve, and they’re prepared to sabotage content, creativity and innovation to avoid doing so.

 

It’s important that people understand that what’s behind these media mergers is the Christian conservatives movement and the Republican Party.  Because the Republican Party and the Christian conservatives have a master plan to control everything in this country and they are willing to kill their own families in kill children and murder them in the street in order to get what they want.

As I have said before, I was in communication with Gore Vidal before he died while he was living in Europe.  And I have to tell you that Gore Vidal told me that his life with and threatened many times I the Republican Party and Christian conservatives who said they were going to kill him if you did not leave this country.  Gore Vidal also explained to me that the Christian conservatives and the Republican Party and had a Jihad against the Jewish intellectuals and against intellectuals and scientists for many many years.  And even explained that from his experience that he found the the Republican Party and the Christian conservatives actually got a kind of sexual pleasure or sexual enjoyment from the thought of killing the Jewish intellectual thought of killing intellectuals and the thought of killing a scientist.  Because he said that he had never seen such hatred for science and Jewish intellectuals as he saw coming from the Christian conservatives and the Republican Party.  And so he said that was one of the Main reasons the left the United States because he was afraid that the Christian conservatives were going to kill him.  And then parade is on the around the country as a token of what he called their Jihad against the Jewish intellectuals of the United States.

And so consequently, the Christian conservatives and the Republican Party have declared a Jihad against creativity and against teachers and against Jewish intellectuals and against knowledge and again scientists.  Because they hate everything the Christian conservatives hate every single kind of human being and every creation of God that has ever existed, unless that creation is strictly white and Christian and Republican and a man.  Because that’s the only kind of God’s creation that the Christian conservatives and Republican party like are men who are white and Christian and Republican.  Everyone else as far as the Christian conservatives, and Republican Party are concerned must die.

And so being a Jewish intellectual myself, and a scientist, I realize that it’s only a matter of time before, the Christian conservatives and the Republican Party come for me.  Which is exactly why I have been as public and as outspoken as I have on the Internet.  So that everyone will know that when the Christian conservatives and the Republican Party do break into my home and drag my body into the street and turn me alive and on fire while the Christian conservatives and their children dance around my burning body and sing happy songs of how they hate Jews and how they hate everyone in this world and how they are going to kill everyone in this world with your holy war a Jihad against humanity, that everyone in the world will know the Christian conservatives did this to me because they hate Jews and they hate intellectuals and they hate teachers and they hate knowledge and they hate scientists and they’re prepared to kill every single human being in the entire world to be able to get what they want.

As American citizens we have seen the creativity of the entertainment industry a much destroyed because the Christian conservatives refused to allow anything to be presented on TV that does not fit their extremely narrowminded and ethnocentric and egocentric hatred of everything in this world that is not white and Christian.  Adolf Hitler used the same methods when he was forming is Nazi regime during World War II.  He used the same methods of propaganda and mass murder of the the Christian conservatives and the Republican Party are employing now he used the same methods of control over the media services in Germany that the Christian conservatives are in fact using now.

That’s because the Christian conservatives every single one of them has a copy of Mein Kampf in their homes and every Republican Party member of the United States Congress reads Mein Kampf, which have a copy of in their offices.  And they really every single month and swear allegiance to Mein Kampf above and beyond their duty as American citizens because they don’t care about the Constitution they care about Mein Kampf and establishing a new Nazi regime in these United States.  And they will do so even if they have to destroy every single the creativity and kill every single intellectual Jewish and otherwise and murder every scientist in this country.  The Christian conservatives will be the voice of God your under even if they have to kill God and Jesus Christ to do so.

And so like I’ve already explained, you can see how the quality of creativity has become completely soured and almost virtually destroyed in this country are the Christian conservatives of these United States.  This is one of the reasons I refuse to do business with Rupert Murdoch and his television service known as DirecTV.  Because Rupert Murdoch is using his service of DirecTV to promote his propaganda and spread his racial hatred of Jews and black Americans.  Because Rupert Murdoch is known all over the entire world as someone who hates everyone in the entire world.  He hates the royal family of England he would love to kill them.  He hates everyone in this world and he wants to do everything he can to steal as much money as he possibly can because he doesn’t care if yes to kill his own children.  He will get all the money he can.  And he doesn’t care who has to kill in order to do that.

So consequently, that’s why I’m not using my DirecTV service and why I’m canceling it and why refuse to do business with anyone who is under the control of Rupert Murdoch.  And if the Christian conservatives take over all the media services.  I won’t be watching television anymore.  But then I have over 1000 movies your I home that I’ve already recorded before, the Christian conservatives were able to destroy the media services in this country.  So I don’t need TV if I don’t want to have to be I can watch any one of my movies that the Christian conservatives have not enabled to destroy.  And no matter what the Christian conservatives do they will not win over me.  The only way that the Christian conservatives will win in their attempt to destroy this country and to destroy the media services of this country and destroy America’s lives is over my dead body.  And if that’s exactly what the Christian conservatives want.  I don’t have any problem with that.  Bring it on.

 

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Much like a game of a cat chasing a mouse, analyzing financial statements can be an endless effort of hunting down a company’s true underlying fundamentals. Publicly traded companies have a built in incentive to outmaneuver its investors by maximizing profits (or minimizing expenses). With the help of flexible GAAP (Generally Accepted Accounting Principles) system and loose estimation capabilities, company executives have a fair amount of discretion in reporting financial results in a favorable light. Through the appropriate examination of the cash flow statement, the cat can slow down the clever mouse, or the investor can do a better job in pinning down corporate executives in securing the truth.

Going back to 15^th century Italy, users of financial statements have relied upon the balance sheet and income statement*. Subsequently, the almighty cash flow statement was introduced to help investors cut through a lot of the statement shortcomings – especially the oft flimsy income statement.

Beware of the Income Statement Cheaters

Did you ever play the game of Monopoly with that sneaky friend who seemed to win every time he controlled the money as the game’s banker? Well effectively, that’s what companies can do – they can adjust the rules of the game as they play. A few simple examples of how companies can potentially overstate earnings include the following:

• Extend Depreciation: Depreciation is an expense that is influenced by management’s useful life estimates. If a Chief Financial Officer doubles the useful life of an asset, the associated annual expense is cut in half, thereby possibly inflating earnings.
• Capitalize Expenses: How convenient? Why not just make an expense disappear by shifting it to the balance sheet? Many companies employ that strategy by converting what many consider a normal expense into an asset, and then slowly recognizing a depreciation expense on the income statement.
• Stuffing the Channel: This is a technique that forces customers to accept unwanted orders, so the company selling the goods can recognize phantom sales and income. For example, I could theoretically sell a million dollar rubber band to my brother and recognize million in profits (less 1-2 cents for the cost of the rubber band), but no cash will ever be collected. Moreover, as the seller of the rubber band, I will eventually have to fess-up to a million uncollectible expense (“write-off”) on my income statement.

There are plenty more examples of how financial managers implement liberal accounting practices, but there is an equalizer…the cash flow statement.

Cash Flow Statement to the Rescue

Most of the accounting shenanigans and gimmicks used on the income statement (including the ones mentioned above) often have no bearing on the stream of cash payments. In order to better comprehend the fundamental actions behind a business (excluding financial companies), i firmly believe the cash flow statement is the best place to go. One way to think about the cash flow statement is like a cash register (see related cash flow article). Any business evaluated will have cash collected into the register, and cash disbursed out of it. Specifically, the three main components of this statement are Cash Flow from Operations (CFO), Cash Flow from Investing (CFI), and Cash Flow from Financing (CFF). For instance, let us look at XYZ Corporation that sells widgets produced from its manufacturing plant. The cash collected from widget sales flows into CFO, the capital cost of building the plant into CFI, and the debt proceeds to build the plant into CFF. By scrutinizing these components of the cash flow statement, financial statement consumers will gain a much clearer perspective into the pressure points of a business and have an improved understanding of a company’s operations.

Financial Birth Certificate

As an analyst, hired to babysit a particular company, the importance of determining the maturity of the client company is critical. We may know the numerical age of a company in years, however establishing the maturity level is more important (i.e., start-up, emerging growth, established growth, mature phase, declining phase)*. Start-up companies generally have a voracious appetite for cash to kick-start operations, while at the other end of the spectrum, mature companies generally generate healthy amounts of free cash flow, available for disbursement to shareholders in the form of dividends and share buybacks. Of course, some industries reach a point of decline (automobiles come to mind) at which point losses pile up and capital preservation increases in priority as an objective. Clarifying the maturity level of a company can provide tremendous insight into the likely direction of price competition, capital allocation decisions, margin trends, acquisition strategies, and other important facets of a company (see Equity Life Cycle article).

The complex financial markets game can be a hairy game of cat and mouse. Through financial statement analysis - especially reviewing the cash flow statement - investors (like cats) can more slyly evaluate the financial path of target companies (mice).  Rather than have a hissy fit, do yourself a favor and better acquaint yourself with the cash flow statement.

Wade W. Slome, CFA, CFP®

Plan. Invest. Prosper. 

*DISCLOSURE: Sidoxia Capital Management (SCM) and some of its clients own certain exchange traded funds, but at the time of publishing had no direct positions in any security mentioned in this article. References to content in Financial Statement Analysis (Martin Fridson and Fernando Alvarez) was used also. No information accessed through the Investing Caffeine (IC) website constitutes investment, financial, legal, tax or other advice nor is to be relied on in making an investment or other decision. Please read disclosure language on IC “Contact” page.

 

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“What was it like to spend nine years trying to persuade the [SEC] that Bernard Madoff was a fraud, only to learn that the agency thought he was perfectly reputable? For nine years I was the SEC’s dormat. Now you’re triumphant, a hero in investment circles who exposes the SEC as the most futile of agencies in your new book, ‘No One Would Listen.’ It was a trip though the twilight zone. … They’ve reorganized. They redisorganized the enforcement unit. I actually approve of that. I think Robert Khuzami, the new head of the enforcement division, has got fire in his belly. Are you saying the SEC under Schapiro is about to catch fraud on Wall Street? She has the wrong staff. They’re a bunch of idiots over there. What do you mean? The five commissioners of the SEC are securities lawyers. Securities lawyers never understand finance. They don’t have the math background. Of you can’t do math and if you can’t take apart the investment products of the 21st century backward and forward and put them together in your sleep, you’ll never find the frauds on Wall Street. … They’re overlawyered. They’re poisoned by lawyers”, my emphasis, Deborah Solomon interview with Harry Markopolos (HM) at the NYT, 28 February 2010, link:

http://www.nytimes.com/2010/02/28/magazine/28fob-q4-t.html.

HM is too kind to the SEC. It is worse than full of idiots. It is corrupt from top to bottom. That it is overlawyered and lawyers are innumerate is old news. See my 22 December 2007 post: http://skepticaltexascpa.blogspot.com/2007/12/us-injustice-system-at-work.html.

The SEC staffers’ incentives are all wrong. That’s why idiots like Meaghan Cheung work there, 18 January 2009:

http://skepticaltexascpa.blogspot.com/2009/01/meaghan-moron.html.