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Warning flags should get raised when statements are made about how a company's health makes more sense "when we stop trying to understand it by looking at finan
by qasar 13y ago
Warning flags should get raised when statements are made about how a company's health makes more sense "when we stop trying to understand it by looking at financial statements".
In finance, creativity is not an asset and the standardization allows the public a structure to critically assess the organization. Specifically against other similar organizations. Of course, if there were financial statements made specifically for (let's say) Twitter - Twitter could highlight all their strengths and quietly hide their weaknesses. I'm not sure that's what is best for the public.
- valar_m 13y agoThe quote is a little less scary in context: "But the "mystery" of Amazon's surging valuation over recent years becomes a lot less mysterious when we stop trying to understand it by looking at financial statements that were developed long ago for bondholders in an industrial economy, not for stockholders in an information economy – statements that don't tell us what matters most to investors." The article had nothing to do with creative accounting or misleading financial statements. To the contrary, Amazon's compliance with accounting rules is a key part of the author's argument -- that Amazon's expenditures on R&D and advertising, though resulting in lower earnings per share right now, are investments that will pay off in the future. Full Disclosure: Amazonian.
- omi 13y agoYou don't know if it will pay off or someone new will come a long and wipe the floor with AMZN. It happens to all big companies that let the temporary superiority get to them.