[cogman10]

Perhaps consider Hollywood accounting [1] before being concerned with net income. Suffice it to say, it's within ford's best interest to often report negative or near negative net profits. That's how you reduce your tax burden.

It's super easy for a company to make up additional overhead above and beyond gross profits to disappear everything. (including money spent on stock buybacks, dividend payments, and CEO perks).

A company that has 23 billion in gross profits and -2 billion net income isn't what you think it's saying.

[1] https://en.wikipedia.org/wiki/Hollywood_accounting

[lotsofpulp]

If you are equating unregulated Hollywood accounting to SEC regulated 10-K filings, then either you need more education, or you distrust the system so much that conversing would be pointless.

And businesses cannot reduce net income by the amount of dividends or stock buybacks, for obvious reasons.

[cogman10]

> If you are equating unregulated Hollywood accounting to SEC regulated 10-K filings, then either you need more education

Are you saying it wouldn't be advantageous to claim an easily recoverable loss which both makes your shareholders happy and reduces your tax burdens not only for the current year but future years (because you can defer losses)?

Hollywood accounting is orthogonal to the concept of a 10-k. The numbers are "real" but they are also VERY easy to manipulate (IE, doing a stock buyback).

I'd suggest considering the case study of sears. Where somehow a public company went bankrupt yet the owner ended up with billions of dollars and... the company.. again.. somehow. [1] That is hollywood accounting in it's full action and all perfectly lined up for 10-ks (after all, AFAIK the SEC never stepped in here to give Lampart so much of a slap on the wrist).

I'm not saying that Ford or others are anywhere near as bad as what happened to Sears/Kmart. I am saying that the same system Ford operates in, sears operates in.

[1] https://www.investopedia.com/news/downfall-of-sears/

[lotsofpulp]

> Are you saying it wouldn't be advantageous to claim an easily recoverable loss which both makes your shareholders happy and reduces your tax burdens not only for the current year but future years (because you can defer losses)?

What is a “recoverable loss”?

>Hollywood accounting is orthogonal to the concept of a 10-k. The numbers are "real" but they are also VERY easy to manipulate (IE, doing a stock buyback).

Orthogonal means unrelated. It seems like you are using orthogonal to mean “similar”, but I am not sure, since that does not make sense. Either way, how does a stock buyback manipulate anything?

> I'd suggest considering the case study of sears. Where somehow a public company went bankrupt yet the owner ended up with billions of dollars and... the company.. again.. somehow. [1]

Because the owner was not Lampert, but a company with limited liability that happened to own many of the shares. And Lampert has done very poorly with his Sears investment, he has most likely lost wealth over the last 15 years when a riskless SP500 investment would have gained a ton.

https://www.institutionalinvestor.com/article/2bsxn8l0u5yr6z...

[cogman10]

> What is a “recoverable loss”?

Unrelated to the topic at hand. I'm not accusing ford of omissions to their 10-K. That's not what Hollywood accounting means.

> It seems like you are using orthogonal to mean “similar”,

No, I mean orthogonal. You simply do not know what "Hollywood accounting" is.

> And Lampert has done very poorly with his Sears investment, he has most likely lost wealth over the last 15 years when a riskless SP500 investment would have gained a ton.

Really hard to say, but he was able to leverage 4.6 billion dollars [1] to repurchase sears.

[1] https://www.cbsnews.com/news/sears-chairman-eddie-lampert-of...

[mrguyorama]

The SEC does not police tax loopholes. As long as everything they do is documented and legal, the SEC allows it. Hollywood accounting isn't some myth, giant companies like apple do it, where you can "lease" or "sell" intangibles like "IP" consisting only of your brand identity to a separate legal entity in a different jurisdiction that taxes it differently, allowing you to play games with who owns what, and who books what revenue, and who claims what income.

This is all SOP in any company big enough to have its own accounting department. That's like, their entire job and industry.

[sokoloff]

> It's super easy for a company to make up additional overhead above and beyond gross profits to disappear everything. (including money spent on stock buybacks, dividend payments, and CEO perks).

Share buybacks and dividend payments are uses of cash, but do not reduce net income. (They are not an expense.)

https://www.investopedia.com/articles/investing/112013/impac....

https://www.investopedia.com/ask/answers/090415/are-dividend...

[notdarkyet]

Goalpost shifting

Lol -2 billion in net income is exactly what I think it is saying. Are we saying Ford is committing accounting fraud or trickery?

"It's super easy for a company to make up additional overhead above and beyond gross profits to disappear everything."

What about administrative costs? What about debt? Do we ignore everything besides COGS?

Dividend payments, stock buybacks, etc are not ways to disappear everything. They are ways to make their stock attractive to buyers, keep them in dividend indices, etc

How is this whole thread ignoring standard accounting and the reality of properly running a business?

[cogman10]

> Lol -2 billion in net income is exactly what I think it is saying. Are we saying Ford is committing accounting fraud or trickery?

No. That's a misrepresentation of what I'm saying. I'm not accusing ford of doing anything illicit with their accounting. I'm saying that net income is a number that's both easily and frequently gamed.

> What about administrative costs? What about debt? Do we ignore everything besides COGS?

Nope, I'm saying we should pay the "COGS" fairly because they are ultimately what makes the business run. The admin and shareholders can be paid after the cogs get paid.

Have you considered that money is fungible? The admin can take lower salaries, do less buybacks, and enter into less debt. And, in fact, I'd suggest (and you'd likely agree) that a good business does that anyways. If operational costs were 0, any business could still find a way to have negative income.

[refurb]

No, net income absolutely is not “easily gamed” for a publicly traded company.

You’re out of your element here.

[refurb]

You’re digging yourself into a deeper hole here.