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Why Footnotes Matter

Tuesday, September 2nd, 2014 9847507703_dd64987b03_z

Hidden items lurking in the financial footnotes can dramatically impact a company’s yearly profitability.

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Enterprise Value – Definition and calculation

Thursday, August 22nd, 2013 Enterprise Value – Definition and calculation

The theoretical value of Enterprise Value is the total takeover value of the firm. And if that is the case, then all claims on cash flows need to be included. We go the extra mile with our diligence to ensure all claims are captured in our Enterprise Value formula.

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Asset Write-Downs – Invested Capital Adjustment

Monday, July 22nd, 2013 AWDF1

For debt investors, which GAAP was primarily designed for, write-downs are analytically helpful. They provide a more accurate assessment of the liquidation value of a company’s assets. For equity investors, on the other hand, write-downs are not helpful because they distort the return on invested capital (ROIC) of a company.

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Non-Operating Expenses Hidden in Operating Earnings – NOPAT Adjustment

Wednesday, June 12th, 2013 ENOPTIO

Non-operating expenses are unusual charges that don’t appear on the income statement because they are bundled in other line items. Without careful footnotes research, investors would never know that these non-recurring expenses distort GAAP numbers by lowering operating earnings.

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MF Global Was a Dangerous-rated Stock

Wednesday, November 2nd, 2011 MF Global Was a Dangerous-rated Stock

New Constructs rated MF Global (MF) a Dangerous stock long before it blew up.

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Accounting Is Fishy at the Zumiez (ZUMZ) Surf Shop

Tuesday, March 29th, 2011 Accounting Is Fishy at the Zumiez (ZUMZ) Surf Shop

2010 earnings for the retail apparel sector have been quite strong, especially compared to 2009. However, looking behind the window dressing of reported earnings, we find that not all earnings are made the same. Zumiez Inc. (ZUMZ), retailer of cool, new action apparel turned to an old accounting trick to boost its 2010 earnings by 13%

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Sandridge Energy (SD) – Free Report, for Ask Matt Readers, Highlighting a Major Red Flag in the Footnotes

Thursday, August 19th, 2010 Sandridge Energy (SD) – Free Report, for Ask Matt Readers, Highlighting a Major Red Flag in the Footnotes

Here is our free report on Sandridge Energy for Ask Matt readers. Our analysis of the Financial Footnotes reveals a major RED FLAG: the company has written off over $3.4bn in assets in just the last two years.

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Economic Versus Accounting Earnings

Thursday, August 5th, 2010 dreamstimefree_966040_thornBranch

Accounting data was not designed for equity investors, but for debt investors. “Earnings, earnings per share and earnings growth are misleading measures of corporate performance.”(from page 66 in The Quest For Value by Bennett Stewart, Harper Collins 1991.)

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New Constructs Receives Patent on Research System

Thursday, July 22nd, 2010 dreamstimefree_73564_sculptor

The United States Patent and Trademark Office awarded us patent #7,752,090, titled: System and Method For Reversing Accounting Distortions and Calculating A True Value of a Business.

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Greatest Hits: New Constructs media highlights

Monday, July 19th, 2010 Greatest Hits: New Constructs media highlights

New Constructs has a strong reputation on Wall Street and with individual investors. We have been recognized for our analytical rigor (options, hidden debt, write-offs, red flags) as well as the stock-picking benefits of our hard work and analysis.

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Finance 101

Thursday, May 13th, 2010 Finance 101

Finance is the process for making accounting data useful.

Per Accounting 101: accounting data by itself is not useful. Think of accounting data as the words used in the language of Finance. Just as with any language, words can be arranged to convey almost any meaning.

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