Word: flowing
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...cook its books? By treating routine expenses as capital investments. Normal operating expenses must be subtracted from a company's revenues in the year they occur. But capital expenditures can be subtracted from revenues a little at a time over many years. In the short term, that lets money flow to the bottom line and boosts financial results. It's the oldest trick in the book, and mind-numbingly simple. Dennis Beresford teaches Accounting 101 at the University of Georgia and says what happened at WorldCom is "plain vanilla" trickery that he covers on the second day of class...
...FOLLOW THE MONEY Howard Schilit, head of the Center for Financial Research and Analysis in Rockville, Md., suggests looking at the statement of cash flow in a company's annual and quarterly reports. Over time, net income and cash flow from operations "should move in the same direction and at similar rates," he says. Cash flow is hard to finagle, so if net income rises faster than cash flow, that can be a sign of accounting tricks--as it was at Enron...
...DEBTORS Companies that binge on borrowed money, like WorldCom and Adelphia, end up with no margin for error. Robert Olstein, manager of the Olstein Financial Alert Fund, avoids firms whose debt is greater than half of total capital or more than five times their free cash flow. (Get these ratios at morningstar.com Enter the company name under "Quicktake Reports"; scroll to "Financials...
...Latin America. Reform Lost in the Mail Japanese Prime Minister Junichiro Koizumi was forced to compromise on deregulating postal services, which he made a litmus test for larger reforms. A public postal corporation will be formed, but the effort to introduce competition has been returned to sender. The Flow Slows Money may make the world go round, but cash itself isn't moving as it used to. A fall in privatizations and cross-border mergers has led to a 56% plunge in foreign direct investment in the world's richest nations, says an O.E.C.D. report. BOTTOM LINES "The fear...
Essentially in a hallway, the flow of traffic through the exhibit created an atmosphere not of contemplation, but of the hurried rush of families confused by the sudden exhibit. As opposed to the other museums in the area, there was no room for tourists to collect themselves after going through security, and immediately “outside” the exhibit was a café, the gift shop and, after a large open space, the other exhibits. Consequently, the exhibit never was able to capture fully the viewers’ attention. Being jostled, rushed and told by security guards...