Forum Archive Index - January 2002

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

Hi Ben,
>
>
>Here's an interesting article by James Cramer on TheStreet.com
>
>http://www.thestreet.com/funds/smarter_up/10007009.html
>
>In it he predicts that because of several high profile accounting
>related sell-offs, investors are going to move towards companies 
>with simple balance sheets that are easy to understand.  
>
>
>
I think many New Zealanders learned the downside of companies that 
shuffle assets between sub-companies of their own, way back in 1987! 

But there are a couple of recent examples of 'complex accounting' 
that have have worried me.

The first is Air New Zealand's determination to count their 
transactions associated with the purchase of aircraft as 'investing 
activities'.   I can't see that these transactions should be "ring 
fenced" from the ordinary activity of operating an airline.  I have 
no doubt such treatment complies with all the appropriate accounting 
standards.  But that doesn't make it feel 'right'.

The second was the somewhat arbitrary (in timing) revaluation of 
Auckland International Airports assets.  It kind of wrecks any ROE 
performance figures and I am still unclear as to why they had to do 
it.

I await other peoples comment on the article with interest. SNOOPY



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