From time to time, many companies engage in "stock buybacks" in order to increase the value of their stock, and I got to thinking about this practice yesterday.
More or less, you take money in quarter 1, buy back the stock, and then the money you spent in quarter 1 gets taken off profits in quarter 2. You reduce the number of shares and increase the profit/share in quarter 1, but then take the expense later, decreasing your profit/share at that time. Of course, you ignore that expense in your pro forma accounting sheets, falsely telling investors that your P/E is actually quite healthy.
One wonders how many other activities of corporate finance offices are shell games, and how much more prosperous we might be if we didn't play them.
Mittens for Ben - It’s about 10 degrees today in our area. We have a little fresh now, and the kids were excited to clear it. Ben’s older sisters made sure he had a pair of ...
1 hour ago