As easy as ABC, page-3

Thank you for your input Galba. I had some concerns earlier in the year with the 36% increase in the first half profits when I latter read that some of the growth was from ‘and a reduction in our doubtful debt expense’. In a previous post I pointed out that the adjustment may have been substantial for this business.

While I do not work in big business, I would image that at this time of the year, boards would start looking at next year’s budgets closely. In any endeavour, we always want to improve on our last performance.

My logic is that if you have already met your respectable profit guidance of 10 to 18% for the year, why try and be a hero and increase it up to 18 to 25%. That only makes next year’s hurdle of increasing profits harder. That’s why I think there is genuine revenue growth this half and profit and cash flowing through. I am therefore somewhat confident that there are no further substantial accounting adjustments that may artificially increase profits for this financial year. I can only hope.

I am only interested in how the business is going today so that I can try and gauge how it will go in the future. Adjustments only blur the picture. Enjoy your week.