Volume 7, No. 10

 
Back To School: An Income Statement Geography Lesson:  The business lexicon has become exceedingly unwieldy. It's become filled with terms like these: restructuring charges, in-process research & development charges, unusual charges, non-recurring charges, and merger-related charges. All of those kinds of charges are supposed to carry a certain cachet with investors: they carry the implication that such charges are somehow "extraordinary" - an implication that is patently untrue. Frequently, analysts will lapse into corporate-speak and incorrectly label the commonly-found charges as extraordinary. Extraordinary items are far different than those mentioned above. It's worth pausing and reviewing just what is classified as an extraordinary item and what is not - and why the standards were developed that way.

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