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On the other hand, GAAP requirements cause a rapidly growing company's income to be reduced due to its own stock price fluctuations: 1) The cost of the issued
by usaar333 15y ago
On the other hand, GAAP requirements cause a rapidly growing company's income to be reduced due to its own stock price fluctuations:
1) The cost of the issued option must include time value of the stock. If a company's stock becomes more volatile, for whatever reason, their GAAP income appears to be reduced.
2) If a company's stock rises, the options vesting appear to be worth more and more. In other words, the mere act of the stock price rising depresses income.