“Comment, question or quotation of the day”

24-05-2018 : Why do companies feel the need to develop alternative performance indicators to IFRS's?

A study by Mazars shows, on a sample of 86 European groups, 7 different names for the operating result (operating result, EBIT, result of operations, etc.) and the use by 39 of 51 industrial groups to adjusted operating profit. Of course, let's not be naive. If companies do it, it is to try to present their results in the best possible light. But it is also to respect the principle of good information as the IASB that produces the IFRS has abdicated its responsibilities in this area. Thus the deletion in the IFRS of the distinction between current and exceptional items, on the pretext that it is a question of judgment (as if the establishment of the accounts did not require any judgment on the part of those who produce them) necessarily drives the readers of accounts interested in this information (unlike the IASB) to seek it in one way or another, and companies to assist them in this task by developing performance indicators that overcome the shortcomings of IFRS.   If the alternative performance indicators are presented by the listed companies with pre-eminence over the IFRS indicators, in contradiction with the recommendations of the European securities regulator (ESMA), it is not the companies that are at fault, but fundamentally the IASB which has chosen to devote its energy over the past decade to unhelpful standards (such as the one on leases), rather than dealing with serious issues like this one. And it is not for lack of having been warned on many sides, including ours on several occasions. Over the years, the IASB has, with full knowledge of the facts, taken the risk of delegitimizing accounting. And the risk materializes.   Blaming companies to adapt, it is a bit as if, during strikes in public transportation systems, customers  would be criticized to develop car-sharing or teleworking ...!   Have a nice day.

16-05-2018 : Quote of the day

  “Cash is Truth” 


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The Vernimmen.com Letter

Number 113 of May 2018

News : Would L'Oréal be right to acquire Nestlé's stake in its share capital?

Statistics : Worldwide corporate income tax rates

Research : Maturity and the cost of bank loans

Q&A : What are financial synergies?