Hello, I was going over a Ft paper ("Two reviews have not solved Britain's audit problem") and I found a part not so clear to me:
"Part of the problem is the way the system has evolved to set ever more “clear” and precise written rules to make listed company accounts “value relevant” for investment analysts. Some of these are simply bizarre, such as the circular rule where a company’s falling share price leads to a decline in its creditworthiness. The reduction in the value of its traded debt is treated as an accounting gain"
How is it possible to register a gain if your stock is losing? It seems to be a paradox...
Thanks a lot in advance!
"Part of the problem is the way the system has evolved to set ever more “clear” and precise written rules to make listed company accounts “value relevant” for investment analysts. Some of these are simply bizarre, such as the circular rule where a company’s falling share price leads to a decline in its creditworthiness. The reduction in the value of its traded debt is treated as an accounting gain"
How is it possible to register a gain if your stock is losing? It seems to be a paradox...
Thanks a lot in advance!
