Just like you never want to hear a doctor say "oops" in the operating room, you never want to see a going-concern statement in a financial report about a company you own. Accountants throw these in when they've been over the books, talked to customers, and checked the horoscopes and have concluded there is "substantial doubt" about a company's ability to remain in business. In short, don't blame the accountants if the company files for bankruptcy protection.

You¿d reckon that a going-concern statement would be enough to send investors running to the exits, but it's not. True, many large institutions automatically bail when an existing company gets slapped with one of these, but many individuals (often wrongly) take a chance they know more than the bean counters.

During the tech boom of the late 1990s, many companies actually went public even though they had been hit with going-concern statements. Many of those companies subsequently disappeared. Enough said.

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Thursday, August 28, 2008

Exports Boost Economy in 2Q

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Associated Press

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WASHINGTON--The economy shifted to a higher gear in the spring, growing at its fastest pace in nearly a year as foreign buyers snapped up U.S. exports and tax rebates spurred shoppers at home.

The Commerce Department reported Thursday that gross domestic product, or GDP, increased at a 3.3% annual rate in the April-June quarter. The revised reading was much better than the government's initial estimate of a 1.9% pace and exceeded economists' expectations for a 2.7% growth rate.

The rebound comes after two dismal quarters. The economy actually shrank in the final three months of 2007 and limped into the first quarter at a feeble 0.9% pace. The 3.3% growth in the spring was the best performance since the third quarter of last year, when the economy was chugging along at a brisk 4.8% pace.

Still, the growth pickup is not likely to be seen as a lasting sign that the fragile economy is back on solid ground.

Federal Reserve Chairman Ben Bernanke recently warned the economy will be weak through the rest of this year. A growing number of analysts fear that the country will hit another economic pothole in the fourth quarter, as the bracing impact of the tax rebates disappears. And there are concerns exports could tail off as other countries' economies slow down.

GDP measures the value of all goods and services produced within the U.S. and is the best barometer of the country's economic health.