Big Tech Accountants Have Been Using Every Trick In The Books

Big Tech Accountants Have Been Using Every Trick In The Books
Paul Allison, CFA

21 days ago2 mins

Mentioned in story

What’s going on here?

Big Tech accountants looked after the millions, and the billions on the balance sheets looked after themselves.

What does this mean?

Big Tech firms are big spenders, with a penchant for flashy, pricey equipment. Mind you, it’s easier to swipe the corporate card when you have a crack team of accountants ready to soften the cost. See, when a business buys a big-ticket item, the depreciation – that’s the value an item loses each year – counts as annual expense. (Just think of a new car: it becomes less valuable as time goes on, meaning you’d recoup less of your investment if you decided to sell it on.) Savvy accountants, though, simply stretch out the lifespan of each machine, making that annual cost easier to swallow. That might sound like a case of collecting spare coins, but everything’s bigger stateside: Microsoft, Meta, Alphabet, and Amazon managed to find a spare $10 billion between them over the last two years through that technique alone.

Why should I care?

For markets: The dossier of truth.

Accountants have a reputation for being reliable, by-the-book, and frankly, a little dull. They break that mold a little when they pull off tricks like thinning out depreciation costs, but that all happens in the profit and loss statement. The cash flow account, a completely separate document, purely records the money that moves in and out of a business. Not even the smartest accountant can change those numbers – and if they do, they’ll swap their desk seat for a jail cell.

The bigger picture: Geek in the sheets.

Plenty of companies would rather show investors their finely tuned profit and loss statements, but Big Tech firms may soon want to hang cash flow accounts on their office walls. There are only so many data centers worth building, see, so when the hefty spending slows down, cash flow will take center stage on their sheets.

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