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This site is the inspiration of a former reporter/photographer for one of New England's largest daily newspapers and for various magazines. The intent is to direct readers to interesting political articles, and we urge you to visit the source sites. Any comments may be noted on site or directed to KarisChaf at gmail.

Tuesday, October 29, 2013

Would You Buy This Business? -- By Phoenix Capital Research, Posted at Zero Hedge

I have a business I would like to sell you.

Let’s run over the numbers first.

First and foremost, I have to be honest, this business has not implemented a budget in five years. I know that seems like an insane way to run a business, but I can assure you that management is comprised of highly intelligent, ethical people.

These folks would never take advantage of shareholders. They’re all highly educated. And their corporate presentations and conference calls are extremely well written. Trust me, they know what they’re doing.

Having said that I also need to disclose that this business hasn’t been growing much at all. Indeed, it hasn’t even maintained annual growth of 3% in the last five years. On top of this, management has been caught fudging the company’s financials by several outside auditors. An honest assessment of its topline shows zero growth for the last few years.

I know I mentioned before that management are highly ethical. I can assure you they have a good reason to overstate their growth numbers: if the numbers reflected reality, they’d all be fired! We can’t have that can we? So they just “massage” things a bit to make the company’s growth look better than it is and to downplay the rise in costs that are squeezing its margins.

Speaking of which, this company isn’t profitable. In fact, it hasn’t been profitable for five years… actually it has only been profitable a few years out of the last five decades. And those years were “profitable” based on some really massaged numbers.

I know this sounds strange, but those honest folks in management think the best means for this company to grow is to spend way more than the company makes in its topline revenues. Sounds weird, I know. But again, these are very intelligent and ethical people. And none of the analysts covering the company ever ask about this. So what’s the problem?

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