Profitability is all lies, you report what you want, the goal is to ensure whatever numbers you want to communicate raises nicely quarter over quarter.

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MichaelZuo 4 days ago | parent | next [-]

Yeah the advice I’ve heard is that if a company refuses to provided audited GAAP numbers, just run away, no point at all in engaging beyond that.

And even if they do provide those numbers, you still need to scrutinize the cash flow statement and balance sheet.

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Foobar8568 4 days ago | parent [-]

Even that...I can't comment but companies play with CAPEX, OPEX, what they call innovation, what they amortize etc.

Amortizing CAPEX, claiming it's innovation and building on the future when it's done by consultancy having a 1-3y turn over.

Oh and let's fake maintenance works under "projects".

I am not accountant, so there might be some stuff missing but the 3 upper points are stuff I have seen in many companies.

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mrandish 4 days ago | parent | next [-]

> companies play with CAPEX, OPEX, what they call innovation, what they amortize etc.

True but most public companies reporting under GAAP tend to play roughly similar games to roughly similar degrees. So these metrics alone may not reflect much objective reality about a particular company at a given moment but can be useful in benchmarking the relative performance of similar types of companies against each other.

	▲	Spooky23 4 days ago \| parent \| next [-]
		Exactly. That drives alot of the faddish nature of business. After Microsoft and Adobe started printing money with SaaS, suddenly everyone decided that selling software, one of the most lucrative businesses to ever be devised was a loser. Everyone wants $50/user/month now. I realized it at a big enterprise. I couldn't figure out why one of my suppliers was flying out senior execs if I looked at the salesguy funny. We had a $2M account, and it turns out in the transition to SaaS, they value it like a financial product like insurance or a bond. So my stupid $2M spend may impact the market cap of the company 100x... which gets the Chief Revenue/Sales Dude a fat bonus.
	▲	gxs 4 days ago \| parent \| prev [-]
		Exactly - this is a case where consistency is more important than accuracy If everyone is optimizing their GAAP figures, eventually everyone converges on a similar number you can compare across companies Downside is that if you don’t play the game you’re sort of screwing yourself

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jacquesm 4 days ago | parent | prev [-]

By the time you understand this that particular Monthy Python sketch (the machine that goes 'ping') will really have you in stitches.

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jaynate 4 days ago | parent | prev [-]

There are revenue recognition rules that govern what Revenue is on the P&L. Same with costs/expenses. But I would say if anything, profits are easier to manipulate than revenue.