John, Despite the bickering, you, Shann, Norm and relief pitcher Michael seem to be in broad agreement as to certain principles.
Please correct me where I'm wrong. >From the way I understand your post below, you share their belief that profit should be measured in terms of cash flow; that operational profit over a period should be defined as Cash Receipts - Cash Disbursements = Profit. You object to the accountants' definition: Sales - Expense = Profit. Is my observation correct? Now, Norm, Michael and Shann go a bit further than that. I'm not quite sure if you take this extra step or not. Please let us know if you do or do not. The extra step is this: Against sales, along with other expenses, the accountants charge an intangible- - depreciation X. They object to that charge because in their view it causes the accountants to under report profit. The real profit is the accountants' profit + X. Actually, it could be higher due to other manipulations in accrual accounting they would avoid through cash accounting. The fund from which dividends could be paid and capital acquired is much bigger than the accountants report. The management is in on the conspiracy because they do themselves use cash flow in their personal analysis. They know what the real profits are. They look at the accountants' reports and add depreciation back in to approximate the real numbers. The accountants' profit is only a smokescreen to show outsiders. This secret fund is used to purchase capital-- thereby concentrating capital within the firm and to the insiders and direct beneficiaries of the ownership of the firm. Possibly also to pay themselves inflated salaries and bonuses. God forbid! not to pay dividends if it would mean money is to be paid to outsiders. So we are not really facing a Bankers' conspiracy but a conspiracy of Corporate Insiders that has persisted for hundreds of years. It is therefore okay to borrow money from the bankers to purchase stock to acquire ownership; they will be repaid first before dividends are paid because they are our allies on the way to salvation. What do you think? Bill ----Original Message Follows---- From: John Médaille Reply-To: [EMAIL PROTECTED] To: [EMAIL PROTECTED], [EMAIL PROTECTED] Subject: Re: OWNERSHIP: reply to Shann Date: Tue, 27 May 2003 19:20:22 -0500 At 04:14 PM 5/27/2003 +0000, William B. Ryan wrote: >-->Investors use cash not accounting rules to >determine when they have made a profit.<-- > >On its face this statement is astonishing. It is...and it isn't. It is because Profit is an accounting construct, especially in a large, complex organization. As such the number is subject to a high degree of manipulation. It is possible to have no cash and lots of "profits," or no profits and lots of cash. It isn't quite wrong, however, because smart investors analyze cash flow rather than profit. Only cash pays dividends. If a corporation throws off lots of spendable cash, who cares if you call it "profit"? Profit can be an unreliable guide to what a company does. John C. Médaille "A dead thing can go with the stream... but only a living thing can go against it." -G. K. Chesterton http://www.medaille.com/distributivism.htm [EMAIL PROTECTED] ____________________________________________________________ Get advanced SPAM filtering on Webmail or POP Mail ... Get Lycos Mail! http://login.mail.lycos.com/r/referral?aid=27005 ==^================================================================ This email was sent to: [EMAIL PROTECTED] EASY UNSUBSCRIBE click here: http://topica.com/u/?a84IaC.bcVIgP.YXJjaGl2 Or send an email to: [EMAIL PROTECTED] TOPICA - Start your own email discussion group. FREE! http://www.topica.com/partner/tag02/create/index2.html ==^================================================================
