Representation crisis

As I wrap up the current earning season, I find that my confidence in reported numbers doesn't increase. Inaccurate representation about current business operations and future prospects keep showing up in corporate earnings reports.

The Quality Of...

Disclaimer: The views expressed here are mine and may change without notice. Past performance is not indicative of future results. All investments carry risk, including financial loss. This analysis is for educational purposes only and does not constitute investment advice or recommendations of any kind. Conduct your own research and seek professional advice before investing. Please see important disclaimers here and here.

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Consider a company whose revenues are increasing, whose profits are increasing, and whose management is great. Can it be a bad investment candidate? It doesn't sound like it initially, but it could be a bad bet if the quality of key company tenets is not judged properly. Let’s examine this idea closely by evaluating a few business analysis items.

The Four-Legged Stool

"Is the company shareholder friendly? Does it pay a high dividend? Does it buy a lot of its shares?" I had been hearing such statements because some investors and others think returning cash is the most important tenet to judge a company and/or to make an investment. I am skeptical here. 

Delaying Bad News

Disclaimer: The views expressed here are mine and may change without notice. Past performance is not indicative of future results. All investments carry risk, including financial loss. This analysis is for educational purposes only and does not constitute investment advice or recommendations of any kind. Conduct your own research and seek professional advice before investing. Please see important disclaimers here and here.

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Defined Benefit plans are things of the past for most people. But, not for investors. Roughly 20 companies in Dow 30 and more than 300 companies in S&P 500 indices still have such plans. Thus, these companies need to record pension expenses in financial statements. A company’s management uses various assumptions in calculating pension expense. What is the impact of these assumptions on the company's profits? Can these assumptions tell something about management? Let's look here.