Anthony Scilipoti

All these things don't mean anything.

Nothing means anything until it means something.

I say, you know, the things that we're talking about right now, these little things, if you will, you know, in the time of 2000s, just like we talked about Enron that didn't have the disclosure, right?

So the key wrinkle to everything I brought up, and that's why now I want to take it to the accounting, is the financial statements of Nortel didn't show that long-term loan as a part of current assets.

It showed it as part of long-term assets.

So when the simple calculation of current ratios, they would only take both current assets.

And so this long-term asset, that wouldn't show up as part of the liquidity calculation.

It also wouldn't show up as part of operating cash flow.

And if it's not part of operating cash flow, then operating cash flow looks better.

And no one would look at long-term receivables.

And what they would, because they're taught in their CFA, how do you calculate free cash flow?

Operating cash flow, less CapEx.

But this is the problem with when you just create and invest by ratio.

The ratio needs to be adapted to the company, the life cycle, the industry, the business model.

If the company's selling things at a long-term receiver for over a period of extending beyond one operating cycle, but it's part of its normal operations, that should be part of operating cashflow.

And in fact, after Nortel, FASB changed the rules and then long-term receivables became part of operating and current assets.

And that's something we wrote about.

We said, this is wrong.

The free cash flow is actually negative because this number needs to be shown.

So they're extremely vulnerable to something going wrong if the customer can't make payments.