If you thought Magnesita cash flow was a deception, take a look at Julio Simoes Logistica (JSLG3):
- They add back residual costs associated with the sales of fixed assets, "which do not represent operational cash disbursements, as they represent merely an accounting adjustment to book value at the time of sale."
- That's really fantastic: they just consider investments what they have paid for. If it was financed, than they don't consider in the cash flow from investment activities. Below is the brilliant explanation:
It is the opinion of the Company together with its independent auditors that the variations in cash shown in the Increase in Fixed Assets line should only reflect actual cash outflows by the Company. Thus, the acquisitions of fixed assets that actually represented an outflow of cash totaled R$ 36.0 million during 3Q11. A portion of the acquisitions that were effected through the contracting of financing linked to the acquisition of assets (such as Finame and leasing agreements) totaled R$ 191.0 million in the period. Note that the acquisitions that were financed are not reflected in cash flow at the time of their acquisition. However, as the related debts are amortized, the resulting cash disbursements are reflected on the Loans and Financings line.
With that 2 great tricks, they turn a negative free cash flow of 600 millions into an positive and attractive one of 300 millions!
With that piece of shit I would be better if I just look to the net debt evolution. By the way, net debt increased 500 million in just 1 year!
How could be that?
2 comments:
The first issue is understandable and is in line with the accounting rules. But, the second one is just shennanigan. What a piece of shit: "It is the opinion of the Company together with its independent auditors.."
I know it's not a cash consumption, but my point is that if you buy an asset for 100, charge a depreciation of 30 in one year, and sell the residual value for 50, then you have 50 of cash consumption to keep that asset for a year to generate cash. If you don't consider that additional 20 now, when should you keep it into account?
Whatever, there is a clear inconsistency here: they say they earned 321.0 in 9M11, spent 81.7 in assets and paid 225.5 of loan, decreasing cash in just 30.3. But net debt, in fact, had increased 429.6!
So you can see how things can be distorted...
JSL=Shit similar Lupatech, that said they have an adjusted earnings, if was not to consider aquisitions made...
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