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It can also serve as a major red flag, when a company adds in a bunch of unnecessary things while excluding things that aren’t required, but are critical, to va
by AJ007 7y ago
It can also serve as a major red flag, when a company adds in a bunch of unnecessary things while excluding things that aren’t required, but are critical, to valuations such as churn rates.
This was a big one in Uber’s filings where it looked like they were probably mixing in Uber Eats to hide flat or declining usage of the actual ride sharing service. Public companies changing how something has been historically reported also raises similar questions. Report the metrics that look amazing, exclude, merge, or mask the stuff that looks bad.
- i_am_nomad 7y agoOr pull a Groupon and just completely redefine several accounting concepts, e.g. list marketing costs as capital expenditures.
- fgonzag 7y agoI don't get that one. How are they justifying placing marketing as Capex instead of Opex? What is the advantage? Are they saying marketing is a depreciating asset?
- i_am_nomad 7y agoIIRC, their argument is that marketing builds brand awareness, and brand awareness is a capital good.