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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Monday, July 21, 2008

Coming to a Grocery Near You: Higher Food Prices

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FOXBusiness

U.S. food manufacturers will soon pass higher costs along to consumers as commodity costs continue to rise, according to the Financial Times.

Companies including Sara Lee, Kraft Foods, and Kellogg’s will be passing price increases along, according to the report which reported Sara Lee, maker of Jimmy Dean sausages, could push meat prices up by as much as 20% later this year.

Kraft Foods said it will raise prices by 12-13%, and that cheese could go up by as much as 25%, according to the report. Kellogg's said that prices on energy and grain were driving its prices up.

If Kraft Foods, ConAgra, Tyson and Kellogg’s raised prices, it would only contribute to inflation in the U.S. Following flooding in the Midwest, crop prices have soared and supply has become a major concern.

Food prices have increased more than 5% since June 2007, according to the Department of Labor. The increase in food prices in the month from May to June was 0.8%, almost three times as much as the increase from April to May, which was 0.3%.

Prices on meat soared to a 22-year high in June. This is attributed to rising prices for corn, oil and soybeans.