I am referring, of course to Tesla, and the efforts by the board of directors to temporarily pump up the stock price using accounting so that Elon Musk can cash in, because ethics and honesty are only for the little people.

It’s not just Musk though, it’s companies like Norwegian cruise lines, which is using accounting tricks to ignore the effects of Coronavirus so that it can hit the numbers so that its executives get their bonuses.

In the middle of a crisis that threatens to destroy the whole cruise line industry.

At its core is something called adjusted earnings before interest, tax, depreciation and amortization (EBITDA).

The adjustments use factors which are not considered acceptable under generally accepted accounting principles (GAAP), which allows for senior executives to loot the company.

What we are seeing are things like:

• Not counting stock options grants as an expense so that they can issue those same stock options which the executives convert to cash.
• Ignoring expenses like interest payments
• Add in non-existent revenue, such as deferred revenue that results from merger activity. (“Ghost revenue”)

In the case of Norwegian Cruise Lines, it appears that revenue shortfalls from the current pandemic will be ignored because they are, “Not representative of our day-to-day operations and we have included similar nonrepresentative adjustments in prior periods.”

that is accounting speak for, “F%$# you, I want my money.”

The thing is, these are real costs, and real shortfalls, and when companies cook the books to hit numbers to justifiy bonuses, it sucks resources out of the company that otherwise would be invested in improving the business, or ***cough*** Boeing ***cough*** in maintaining a cushion in the event of an event impacting revenues or costs.

See this Twitter thread for a good summary of what is going on:

Stop the looting, and start prosecuting.