Earnings vs Cash Flow. A study in contrasts or a tale of two cities?
Analyst – “You are the only financial institution that cannot produce a balance sheet or cash statement with their earnings”.
This is a quote from ‘Enron – the Smartest Guys in the Room’ during an earnings call with Jeffrey Skilling (CEO) and Andrey Fastow (CFO). The snarky response from Skilling is classic but cannot be shared here for obvious reasons. The sad story behind the orchestrated collapse of this energy giant should be required reading (or viewing) for all MBA courses. The underlying lesson from all of the malfeasance is this – earnings without corresponding cash flow stat