CitiGroup Question.....

[Bullaholic]

How does a bank that declares a 1.6bil profit in the 1st Quarter get a bailout loan?

http://money.cnn.com/2009/04/17/news/companies/citigroup/index.htm?postversion=2009041706

[Pick6]

Originally posted by Bullaholic
How does a bank that declares a 1.6bil profit in the 1st Quarter get a bailout loan?

http://money.cnn.com/2009/04/17/news/companies/citigroup/index.htm?postversion=2009041706

Don't question change that we can believe in

[c-town_balla]

I was going to remove the thread....then I decided to just remove the post!




~RM

[Bullaholic]

Originally posted by c-town_balla
POST REMOVED BY RM

I asked the question without any barbs being directed to any administration--past or present, but rather our government in general.

[c-town_balla]

wasn't directed toward you

[Farmersfan]

Originally posted by Bullaholic
How does a bank that declares a 1.6bil profit in the 1st Quarter get a bailout loan?

http://money.cnn.com/2009/04/17/news/companies/citigroup/index.htm?postversion=2009041706


I think the story answers your question. They reported 1.6 Bil net income, not profit. Read the story! There was a lot of preferred stock dividends paid and bailout loan payments made back to the government...............which resulted in a little over a 900 million dollar loss. It was much better than forecast but still a loss.

[Bullaholic]

Originally posted by Farmersfan
I think the story answers your question. They reported 1.6 Bil net income, not profit. Read the story! There was a lot of preferred stock dividends paid and bailout loan payments made back to the government...............which resulted in a little over a 900 million dollar loss. It was much better than forecast but still a loss.

I did read the story. I don't know how your monitor reads, but here's the first line from the story in the link---

"NEW YORK (CNNMoney.com) -- Citigroup surprised Wall Street Friday as the company delivered its first profit in more than a year, helped by strength within its investment banking division."

[Bullaholic]

Originally posted by Bullaholic
I did read the story. I don't know how your monitor reads, but here's the first line from the story in the link---

"NEW YORK (CNNMoney.com) -- Citigroup surprised Wall Street Friday as the company delivered its first profit in more than a year, helped by strength within its investment banking division."

We all know how "creative" corporations can be with their accounting, don't we?

[Farmersfan]

Originally posted by Bullaholic
I did read the story. I don't know how your monitor reads, but here's the first line from the story in the link---

"NEW YORK (CNNMoney.com) -- Citigroup surprised Wall Street Friday as the company delivered its first profit in more than a year, helped by strength within its investment banking division."


And then the story goes on the tell, "after taking into account the conversion price of a $12.5 billion preferred share offering from January 2008, and $1.22 billion in preferred stock dividend payments to the U.S. government among others, Citigroup reported a loss of $966 million, or 18 cents a share."

So the question needs to be asked, how can they turn in profit when they actually turned in a loss?????? I would have to say the story was poorly written or the first sentence was maliciously written to attempt to stir up a fire storm. I'm not sure I understand the concept of taking the conversion price of a previous stock offering and using it to reduce reported profits now. Any insight on that would be appreciated. But I do agree it sounds like some fancy corporate accounting. But surely our new leader would never allow that???????

[BleedOrange]

Originally posted by Farmersfan
I think the story answers your question. They reported 1.6 Bil net income, not profit. Read the story! There was a lot of preferred stock dividends paid and bailout loan payments made back to the government...............which resulted in a little over a 900 million dollar loss. It was much better than forecast but still a loss.

Net income is profit. The story is confusing. They made a profit of $1.6B.

[Farmersfan]

Originally posted by BleedOrange
Net income is profit. The story is confusing. They made a profit of $1.6B.


Obviously they didn't! They reported a loss of 966 million after paying the required perferred stock dividends. Sometimes "NET" does not really mean "NET". I was paid bonuses for 12 years by a company based on NET Profits. So if my bonus comes out of the Net amount then how can THAT be the NET amount. It would then be required to be adjusted by my bonus amount.......
Oh! the headaches are back!!!!!:eek: :eek:

[Farmersfan]

"Net income is equal to the income that a firm has after subtracting costs and expenses from the total revenue. Net income can be distributed among holders of common stock as a dividend or held by the firm as retained earnings. Net income is an accounting term. In some countries (such as the UK) profit is the usual term.[citation needed] Often, the term income is substituted for net income, yet this is not preferred due to the possible ambiguity.

The items deducted will typically include tax expense, financing expense (interest expense), and minority interest. Likewise, preferred stock dividends will be subtracted too, though they are not an expense. For a merchandising company, subtracted costs may be the cost of goods sold, sales discounts, and sales returns and allowances. For a product company advertising, manufacturing, and design and development costs are included.

Net income is informally called the bottom line because it is typically found on the last line of a company's income statement. A related term is top line, meaning revenue, which forms the first line of the account statement.

An equation for net income in merchandising:

Net income or net loss =
Revenue – Cost of goods sold – Sales discounts – Sales returns and allowances – Expenses – Minority interest – Preferred stock dividends"


From Wikipedia:

[BleedOrange]

Originally posted by Farmersfan
Obviously they didn't! They reported a loss of 966 million after paying the required perferred stock dividends. Sometimes "NET" does not really mean "NET". I was paid bonuses for 12 years by a company based on NET Profits. So if my bonus comes out of the Net amount then how can THAT be the NET amount. It would then be required to be adjusted by my bonus amount.......
Oh! the headaches are back!!!!!:eek: :eek:

Net income is profit. No difference. Here is the definition:

In business, what remains after subtracting all the costs (namely, business, depreciation, interest, and taxes) from a company's revenues. Net income is sometimes called the bottom line. also called earnings or net profit.

[Farmersfan]

Originally posted by BleedOrange
Net income is profit. The story is confusing. They made a profit of $1.6B.


As a general rule Preferred Stock Dividends are accounted for as operating expenses and not after NET INCOME. Only common stock dividends should reduce profit.......

[BleedOrange]

Originally posted by Farmersfan
Obviously they didn't! They reported a loss of 966 million after paying the required perferred stock dividends. Sometimes "NET" does not really mean "NET". I was paid bonuses for 12 years by a company based on NET Profits. So if my bonus comes out of the Net amount then how can THAT be the NET amount. It would then be required to be adjusted by my bonus amount.......
Oh! the headaches are back!!!!!:eek: :eek:

With regard to the bonuses, I am assuming like most companies your bonus is based upon a prior periods performance. As such, the financial impact on profit will not come until a later period (most likely the next quarter). Again, net income is profit. No difference.

[BleedOrange]

Originally posted by Farmersfan
"Net income is equal to the income that a firm has after subtracting costs and expenses from the total revenue. Net income can be distributed among holders of common stock as a dividend or held by the firm as retained earnings. Net income is an accounting term. In some countries (such as the UK) profit is the usual term.[citation needed] Often, the term income is substituted for net income, yet this is not preferred due to the possible ambiguity.

The items deducted will typically include tax expense, financing expense (interest expense), and minority interest. Likewise, preferred stock dividends will be subtracted too, though they are not an expense. For a merchandising company, subtracted costs may be the cost of goods sold, sales discounts, and sales returns and allowances. For a product company advertising, manufacturing, and design and development costs are included.

Net income is informally called the bottom line because it is typically found on the last line of a company's income statement. A related term is top line, meaning revenue, which forms the first line of the account statement.

An equation for net income in merchandising:

Net income or net loss =
Revenue – Cost of goods sold – Sales discounts – Sales returns and allowances – Expenses – Minority interest – Preferred stock dividends"


From Wikipedia:

[BleedOrange]

Originally posted by Farmersfan
"Net income is equal to the income that a firm has after subtracting costs and expenses from the total revenue. Net income can be distributed among holders of common stock as a dividend or held by the firm as retained earnings. Net income is an accounting term. In some countries (such as the UK) profit is the usual term.[citation needed] Often, the term income is substituted for net income, yet this is not preferred due to the possible ambiguity.

The items deducted will typically include tax expense, financing expense (interest expense), and minority interest. Likewise, preferred stock dividends will be subtracted too, though they are not an expense. For a merchandising company, subtracted costs may be the cost of goods sold, sales discounts, and sales returns and allowances. For a product company advertising, manufacturing, and design and development costs are included.

Net income is informally called the bottom line because it is typically found on the last line of a company's income statement. A related term is top line, meaning revenue, which forms the first line of the account statement.

An equation for net income in merchandising:

Net income or net loss =
Revenue – Cost of goods sold – Sales discounts – Sales returns and allowances – Expenses – Minority interest – Preferred stock dividends"


From Wikipedia:


I think you just verified what I was telling you.