Accounting Profit is Fake
Yup, you heard me correctly.
Accountant’s idea of profit is prepared according to tax adjustments and accounting standards. These were established to provide consistency and governance across how accounting is done. The problem is these ‘rules’ are very much open to interpretation — leaving room for ‘creative accounting’.
The collapse of Enron is a prime example of how investors and business owners assess a company’s financial performance is guided by all the wrong numbers.
But if you look at the Net Cash Flow position, you will see that the company was losing cash.
Sounds familiar ?
Yes ! Hyflux , the case which is close to us and affecting 34,000 investors , including me….. I have blogged about it ( here ).
Sometimes, we are paying too much attention on “Profits , which can be twisted or manipulated easily or “Dividend Yield" ,
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