S&P Lists Top 10 Companies With Most 'Inflated Profits'

Using its new standard for measuring profitability, Standard & Poor's (S&P) ranked companies in order of highest to lowest gaps between their reported earnings and core earnings for 2001. The companies at the bottom of the list are the "winners." Those at the top of the list are the "losers" with the most inflated profits.

When earnings were measured by this new yardstick, the top ten winners for 2001 were JDS Uniphase, Corning, Applied Micro Circuits, El Paso, Chevron/Texaco, J.P. Morgan Chase, Safeco, Ciena, AT&T, and AIG.

The losers (companies with the most inflated profits) were DuPont, IBM, Microsoft, General Electric, Verizon, Motorola, Cisco, AOL Time Warner, SBC Communications, and Boeing.

In applying its yardstick, S&P found the most common reasons for differences between book and core earnings were income from pension funds, charges related to acquisitions, and costs of stock options. S&P's Web site contains a worksheet showing the effects of adjusting Cisco's 2001 earnings for these factors. Download the spreadsheet.

View the details of the top ten winners and losers as reported in Business Week.

S&P's methodology does not suggest accounting irregularities or a likelihood of future financial restatements. For additional information about S&P's intent and methodology, visit its core earnings Web site.

You may like these other stories...

Steve Jobs. Sergey Brin. Mark Zuckerberg. Each of these individuals, and their companies, are celebrated as changing the face of the technology. They all followed a similar path to success: excelling at one thing and...
Read more articles by Sally Glick here.While reading a recent article titled, "Bondage to Busyness," by Alan Morinis, I was struck by his reminder regarding how stressed and pressured we all are today. Our...
To assist firm leaders in making key decisions for the future, BKR International, one of the top 10 global accounting associations. recently put together a list of the five priorities managing partners must address...

Already a member? log in here.

Upcoming CPE Webinars

Sep 24
In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards. A dashboard condenses large amounts of data into a compact space, yet enables the end user to easily drill down into details when warranted.
Sep 30
This webcast will include discussions of important issues in SSARS No. 19 and the current status of proposed changes by the Accounting and Review Services Committee in these statements.
Oct 21
Kristen Rampe will share how to speak and write more effectively by understanding your own and your audience's communication style.
Oct 23
Amber Setter will show the value of leadership assessments as tools for individual and organizational leadership development initiatives.