Building a better income statement

Wayne,

Nice Q: and a pet peeve of mine. Working in Software / SaaS and related, GAAP seems like it was written by [insert snappy / unflattering description]. Games space rev-rec is the worst of all; GAAP is clearly and demonstrably misleading. Enterprise licensing is about as bad, being a "square peg-round hole" situation in most cases.

Humorously, the standard MBA accounting class discussion is to dissect GE's financials and figure out how they are managing earnings. A decent GAAP would have fewer levers and would prevent this.

I disagree with some of the statements in the McKinsey report, but generally they are preaching to the choir.

Steps have been taken, such as the line-of-business approach, which if fully implemented in its logical extreme would be excellent. Where I agree with McKinsey is that there needs to be a distinction between operations and others, and per the prior sentence I think we're proceeding.

To me, the devil is in the details, which is not addressed in the report.