Hello!

Thanks for your kind words. I really appreciate you taking the time to share your thoughts, and your question.

I believe you are referring to #3 in my article and my example about the company that delayed a payment on a massive capital lease. Yes? If so, I believe I may have miscommunicated my point in the article. In this instance, the company was accounting for their capital lease obligations correctly. However, they delayed a payment on their lease by one day, paying the lease obligation on 1 April, rather than 31 March. By delaying payment by one day their operating cash flow looked positive when, in fact, it was negative for the first quarter. I caught the error because the company's business model is one of steady cash flow generation. But in the second quarter cash flow statement, with an execution of the same business model, operating cash flow was barely higher than in the first quarter. This made no sense, so I called the company to try and understand what happened. After 3-weeks of back and forth they admitted they delayed payment on the lease to show a positive operating cash flow in the first quarter. This is highly unethical. So I sold my interest in the company.

Yours, in service,

Jason