Essay Database

With the recent volatility of the rupee, more and more companies are seeing the "other income" component of their quarterly accounts bouncing around like tennis balls. This is particularly true for IT companies, whose top line has very little protection from this volatility. Equity analysts have sharpened their focus on this element of the accounts and, even though they should know better, sometimes factor this "uncertainty" into their assessment of the company's future worth. The …

…in a classic case of not seeing the forest for the trees, this obsession sometimes led to an obscuring of the real issue--which is: how do I make sure that my top line (viz. revenue plus other income) is protected at a certain value. Accounting is necessary to create standards for assessment, but let's not focus on accounting entries at the cost of focusing on the real thing--profits. (The author is CEO of Mecklai Financial)