Monday, June 25, 2012

Groupon Is Setting Off Major Accounting Red Flags

From BusinessInsider: Ever since Morgan Stanley led Groupon’s initial public offering in November 2011, the company has had a dismal performance in the market that some had foreseen. In June 2011 the Grumpy Old Accountants, a blog by Anthony Catanach of Villanova University and Edward Ketz of Pennsylvania State University, wrote that “overall, the (Groupon) balance sheet stinks. The income statement reeks. Cash flows are in the toilet. Instead of participating in this IPO, we would rather purchase lottery tickets.” After warning readers in August 2011 not to trust Groupon’s accountants, the grumpy old professors have continued to hammer away ever since. (GMI did not comment on Groupon because it only rates publicly traded companies.)

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