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AutoZone, Inc. Message Board

  • edado edado Dec 6, 2012 5:44 PM Flag

    COOKING THE BOOKS BY MANIPULATING INVENTORY

    HOW DO THEY GET AWAY WITH THIS ... MANIPULATE INVENTORY ACCOUNTING AND YOU ARE MANIPULATING NET INCOME! HOW WILL THEy EXPERIENCE PRICE INFLATION ON AUTOPARTS THAT EVENTUALLY BECOME OBSOLETE. THEY HAVE BEEN USING THIS TRICK FOR YEARS... $266 million of this unrecorded adjustment is alot of EPS manipulation

    FOOTNOTE FROM 10Q

    Note F – Merchandise Inventories

    Inventories are stated at the lower of cost or market using the last-in, first-out (“LIFO”) method for domestic inventories and the first-in, first-out (“FIFO”) method for Mexico inventories. Included in inventories are related purchasing, storage and handling costs. Due to price deflation on the Company’s merchandise purchases, the Company’s domestic inventory balances are effectively maintained under the FIFO method. The Company’s policy is not to write up inventory in excess of replacement cost. The cumulative balance of this unrecorded adjustment, which will be reduced upon experiencing price inflation on the Company’s merchandise purchases, was $266.2 million at May 5, 2012, and $253.3 million at August 27, 2011.

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    • How do you know they do this lard butt?

      Sentiment: Sell

    • great post edado.. can you please help me understand: "experiencing price inflation on the Company’s merchandise purchases"

      Sentiment: Strong Sell

      • 1 Reply to stockbuffet1
      • Exactly .... Help me understand it as well! Because I do not see how they can continue to take this unrecorded adjustment that continues to grow each quarter and allows them to report net income higher then it would be without this unrecorded adjustment. Last year they used this little accounting trick to record an extra 17 million in net income or almost .50 a share more then had they accounted for things under LIFO, which they say they are supposed to use for their domestic accounting purposes. What this means is under LIFO (last in first out) our ending inventory figure would be 270 million $'s less then it is if we used FIFO. If the LIFO and appropriate accounting figure for inventory was used then the Cost of Goods Sold would be $270 million more then has been reported and there net income would have been less by this amount. The accountants justify this little accounting trick by disclosing it the footnotes of the 10Q's but to me it is fraud and inconsistent with GAAP. Just another reason to expect AZO to one day be in Bankruptcy and face class action suits, but for now everyone just looks the other way because for the time being this little Ponzi scheme is making everyone rich.... ala Bernie Madoff

        Sentiment: Strong Sell

    • great post Edado!
      can you please help me understand "The cumulative balance of this unrecorded adjustment, which will be reduced upon experiencing price inflation on the Company’s merchandise purchases,"
      what do they mean by "experiencing price inflation on the company's merchandise purchases"?

      These people are cooking the books and meeting analyst estimate. Current quarter profit $4.51 - almost exact to the penny to the median estimate.. really?

      I thought that, generally, the street was very efficient.. What are we missing? How come no one questions this? What about those analysts.. I find it difficult to accept that so many analysts can be bought an paid for! What a racket!

      again, good post!

      Sentiment: Strong Sell

 
AZO
650.97-1.51(-0.23%)Mar 5 4:00 PMEST

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