GM has announced a loss of 38.96 billion dollars for just last quarter. It comes to $68.85 per share which is humungous considering the shares are only worth $34 each. The bulk of the loss is $38.6 billion for a write down of tax credits and doesn't effect its cash position. Oh really?
What sort of accounting is this? GM is supposed to be a car maker, with a few sidelines like diesel locomotives. Accounting, profit and loss, ought to show money made or lost building cars. In the fine print, GM announced that it only lost $247 million on cars, still a bundle, but peanuts compared to $38.6 billion.
Why was a "tax credit" carried on GM's books as anything? Taxes are an expense, paid every year. You pay 'em and that's that. GM is supposed to do accounting to allow management and investors know what's happening in the car business. When GM's accountants pull an enormous "loss", that has nothing to do with making cars, out of thin air, how can we outside investors, stockholders, have any confidence that the other numbers in the report mean anything? Back when the accountants put the "tax credit" on the books, did that imaginary gain turn a losing year into a winning year?
What is really going on here?
No comments:
Post a Comment