Monday, 2 September 2013

Share market can't read Qantas financial report

I know markets rule the world, but it is a worry when those who invest in the stock market - mostly professionally, can't really read a balance sheet. 'underlying profit' is a definition that Qantas mad up.

In its presentation materials, Qantas preferred to focus on its own special measure for evaluating profit, its ''underlying'' profit before tax of $192 million. This $192 million was largely achieved thanks to a change in accounting policy that brought $134 million forward into the reporting period.

It got there by slicing off $86 million for asset impairments, $118 million for redundancies and restructuring, a $24 million write-down in intangibles - and by adding back a $30 million profit on the sale of an investment.

Without the sale of that investment, it would have shown a pre-tax loss of $13 million.

For excellent explanation read Michael White's article in the

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