Re: [CANSLIM] "M"

From: Spencer48@aol.com
Subject: Re: [CANSLIM] "M"
Date: Mon, 8 Jul 2002 13:18:55 EDT

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Katherine:

     Not to mention (and in particular), Cash-Flow.  Although with WorldCom 
you can't even trust that anymore.

     Come to think of it, though, why would "growth" make a difference.  It 
would, I agree, if the earnings were legitimate.  But, with GAAP being a 
loophole rather than an honest accounting, why can't earnings be mongrified 
for more than 1 year, along with revenue?  

     Also, why believe Merck spokesmen when they explain how "butter wouldn't 
melt in their mouth"?  It seems that accounting practices nowadays are used 
in order, not to reveal, but to hide company shenanigans.

jans

In a message dated 7/8/2002 9:42:51 AM Eastern Daylight Time, 
kmalm@earthlink.net writes:

<< he Wall Street Journal, citing an SEC filing, reports that company 
recorded $12.4 bln in revenue from its Medco pharmacy-benefits unit over the 
past 3 years that the subsidiary never collected. According to the article, 
Medco included as part of its revenue the co-payments collected by pharmacies 
from patients, even though it doesn't receive those funds. Between 1999 and 
2001, co-payments comprised nearly 10% of Merck's overall reported revenue. 
Merck first disclosed the accounting treatment in an April SEC filing for 
Medco's IPO, but didn't disclose the amount of revenue involved until a 
filing on Friday. Merck says the accounting treatment has no effect on its 
net income because it subtracts the same amount as expense. 
 
 
 Accounting rules would allow this kind of treatment (even though it's a bit 
silly to show the monies at all unless the co-payments run through their 
hands at some point). Just goes to show why growth in earnings *AND* revenues 
are equally important when doing a fundamental review.
  >>

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