Black liquor tax credit Comes Back To Burn book Companies

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In 2009, which converted black liquor (a by-product of the paper mills) fuel to replace paper companies became eligible for a tax credit Alternative Fuel mixture (ACMC). The tax credit was an unexpected blessing for paper companies.Sixteen companies paper reported a discount ACMC in 2009, an average of 8% of revenues and 161% of income before tax credit imp?t.Le lasted less than a year - it has expired on 31 December 2009.

Investors bet on these companies to continue the trend of 2009 earnings growth could be sorely disappointed.

The AFMC manna is a single source, non-recurring income which can hide poor economic gains with record comptabilité.Gains accounting gains are full of distortions that obscure the economic gains Trues --l' bargain ACMC is just another example of why disagree DK unting gains are not designed for analysis. Two companies, Kapstone paper and Packaging (SC) and back Paper (RSV), reported income before positive with the AFMC windfall taxes while they had indeed income negative pre-tax after the withdrawal of the ACMC bargain. These companies have also been record accounting gains and never worse economic gains.

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The AFMC manna also offers a unique opportunity to evaluate the consistency of the accounting treatment by firms and the disclosure of this single point.? We expected to see similar accounting treatment and disclosure, but disclosure firms was highly inconsistent and in many cases, misleading.? In fact, two companies gives us a failure of the poor disclosure note.More details on the levels of disclosure are in figure 4 of our report on the bargain for.

16 Business receiving the AFMC exceptional company, document Kapstone and Packaging (SC), has chosen to draw part of Manna from the AFMC in inventory.This aggressive accounting gives essentially KS, a gains cookie jar using 2010.Malgré the fact that the AFMC expired on 31 December 2009, KS aggressive accounting will allow book $0.31 per share in 2010 of the bargain.KS is the only company in 2010 the remuneration structure of expired AFMC the 2009.Il boon is therefore no surprise that this company also had the worst disclosure.As Warren Buffett, "" there never one cockroach in the kitchen.""

Poor disclosure and aggressive Accountants make it extremely difficult for everyday investors reverse accounting distortions to measure true economic gains an entreprise.Bien poor navigation and confusion of disclosure in financial to find the truth about the business profitability and evaluation notes takes hard work and expertise, I think that investors who he sleep better at night.

There is no substitute for "due diligence" list.it interval, watch your back when investing in this market because that nobody else is watching you.

AFMC bargain report is the second in a series of flag rouge.Notre first report of the red flag reports focused on off-balance sheet debt and how it affects more than 2,900 companies.

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