Analysts look at bad loans and strength of assets. They should also be looking at contingent liabilities. This includes future environmental costs. Industry balance sheets are not accounting adequately for future environmental cleanups
They include contaminated groundwater and heavy-metal pollution, asbestos, oil and gas leaks, as well as the obligation from1970’s laws such as Superfund. Companies have had to add accruals to their books for these charges.
The question: How well are corporations accounting for these liabilities? Many major company books are showing only minimal contingent costs of this variety.
This, at a time when they are in the midst of a deep recession that is beset by hard government taxes and restrictions.
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