I have written many times about how Bank of America is lying about their record profits. People never believe me. They read the headlines. They hear the news. They shrug and say, I, meaning me Shakaama, couldn’t possibly know more than the main stream media, wallstreet analysts and the whole Obama gang.
I have a trick up my sleeve today that you will love. Well, you might actually get a kick out of it. I can teach you, to prove the wallstreet analysts wrong by yourself. Here is my patented 10 second analyst course.
- company claims to have made record profits in a certain quarter
- you go to your favorite money site [gosh I wish I had one for you to go to myself, and thus make oodles of money off of you rushing to my site, but alas, I have nothing]
- you pull up that company
- pull up their P&L statement (profit and loss statement)
- ALSO pull up their CASH FLOW STATEMENT (this has to be made available by law on any publicly traded company)
- compare the cash flow with the profit
If a company has low cash flow, they have figured out some unique way of accounting for profits. I am not saying they are lying…. but… they’re lying.
You want and example don’t you. I know you do, because reading P&L statements and Cash Flow statements makes your pants tighter.
We see on the bottom line that their net income was 14.335 billion but their cash flow was only 632 million. This could be an indication of some fraudulent accounting. We know off hand that 2010 was a horrible year for business. However, here we see that their 2009 income and losses are actually much closer together.
Would this be a Berkshire Hathaway criteria company to invest in? No!