tag:blogger.com,1999:blog-28086856.post8431966040432317965..comments2024-03-20T01:42:13.273+08:00Comments on Eight percent per annum: Value investing in Singapore stocks: Which EPS to use? (for calculating PER)Jayhttp://www.blogger.com/profile/03292158817395898619noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-28086856.post-64512628928734148542007-08-29T22:52:00.000+08:002007-08-29T22:52:00.000+08:00The problem with the income statement is sometimes...The problem with the income statement is sometimes an ignorance or some other times, a blessing by the one who signs off it as correct.<BR/><BR/>One of Abraham Lincoln favorite riddles goes like this: "How many legs does a dog have if you call his tail a leg? "The answer: "Four, because calling a tail a leg does not make it a leg." It behooves managers to remember that Abe's right even if an auditor is willing to certify that the tail is a leg.Berkshirehttps://www.blogger.com/profile/02415080722037608944noreply@blogger.comtag:blogger.com,1999:blog-28086856.post-73927930981155825522007-08-29T17:15:00.000+08:002007-08-29T17:15:00.000+08:00That is quite true, it is definitely better to use...That is quite true, it is definitely better to use some form of revised earnings to gauge to the real economic reality.<BR/><BR/>Using EPS offers a quick and dirty way to gauge the co's profitability and should only be used as a first cut when doing analysis on co.sJayhttps://www.blogger.com/profile/03292158817395898619noreply@blogger.comtag:blogger.com,1999:blog-28086856.post-13859755118641022332007-08-23T21:26:00.000+08:002007-08-23T21:26:00.000+08:00Sometimes earnings on the income statement may not...Sometimes earnings on the income statement may not actually represents economic earnings. True earnings which I would like to highlight is more accurate by looking it in the form of earnings that truly belongs to the owners.<BR/><BR/>Owners earnings = a) Operating earnings plus b) depreciation expense and other non-cash charges and then substract c) the average amount of capitalized expenses for plants and equipments that a company needs to maintain its long term competition position and unit volume.<BR/><BR/>For most biz, c) usually exceeds b), so cash flow analysis usually overstates economic reality. When b) & c) are different, cash flow analysis and owners earnings analysis also differs too.Berkshirehttps://www.blogger.com/profile/02415080722037608944noreply@blogger.com