The Globe and Mail reports in its Tuesday edition that consumer-finance lender goeasy made a change to its financial statements recently.
In a Globe special, David Milstead writes that on the behest of the Ontario Securities Commission, goeasy moved a couple of line items out of one portion of the cash-flow statement and into another. As the company noted in a news release, the change had no impact on the company's net income, earnings per share, cash position or balance sheet.
The change in the company's operating cash flow was massive, however. The company had told shareholders that it had $153-million in operating cash flow (OCF) in 2016; the reclassification turned the number to negative $21-million. For 2017, $179-million in OCF became negative $89-million. Over two years, that is a swing of $445-million.
Still, the markets, and analysts, shrugged. Mr. Milstead wonders why a primary measure of how a company generates cash from its business can swing that much, and no one seems to care. At this stage of goeasy's life, while the company is still growing its business rapidly, analysts are much more focused on top-line growth and ensuring the company is not making bad loans that will come back to bite.
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