Earnings: Down Near the Up Sign

Earnings reports are not as complete a measure of corporate activity and efficiency as most people think they are. So said the accounting firm of Price Waterhouse & Co. last week. Reporting on the tax-accounting practices of 100 major U.S. corporations over a twelve-year period, Price Waterhouse Senior Partner Herman W. Bevis found that the 100 had tucked away $950,189,000 to cover deferred tax payments, but eventually paid out only $20 million of that amount. Thus, indicated Bevis, the true profits of the companies cited were actually about $930 million higher than...

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