Big Bath

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Big Bath

The practice of making poor earnings of a company, especially of a publicly-traded company, appear worse than they really are. One may accomplish a big bath through write-offs, prepaid expenses, and so forth. The hidden earnings are revealed in a year, when earnings are better, to make them look even better than they really are. A new CEO sometimes takes a big bath to artificially inflate earnings in the second year of his tenure. This allows him to blame the previous bad year on the CEO who came before him. Not coincidentally, it also increases this CEO's chances of receiving a large bonus in the second year.

References in classic literature ?

Her mother tubs her, for she is far too precious to be touched by any nurse, and then she is rolled up in a big bath towel, and only her little pink toes peep out; and when she is powdered, and combed, and tied up in her night-dress, and all her curls are on end, and her ears glowing, she is knelt down on her mother's lap, a little bundle of fragrant flesh, and her face reflects the quiet of her mother's face as she goes through her evening prayer for pity and for peace."

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The slaughterhouse was a large bare hall with pens for the animals and a separate place for the big baths of brine.

A hub of activity and hard work at slaughterhouse

"By the time I got in the dressing room, the big baths were just full of boys in kilts with cans of lager - drinking with the likes of big Gordon McQueen."

Gregsy can be Britain's No.1 in a Hartbeat; SAYS ALAN ROUGH

He explains on ITV's Orange Playlist tonight: "Even today, there are grounds you go to where there are big baths.

3AM: RIO: LIFE AIN'T SO GRAND

They're all kitted out with big mirrors, big baths and big polished granite shelves.

'The rooms are kitted out with big mirrors, big baths and granite shelves'

King of the 'castle; Banish those January blues with a taste of luxury in a romantic hideaway

An education dome will give families a chance to discover the gruesome world of germs inside a giant u-bend and big baths.

Home horrors show

Of the 19 sample observations considered, the third criterion identifies 12 firm-year observations as potential "big baths." (28) While a disproportionate valuation allowance increase may be part of an earnings "bath," it may also represent a negative signal regarding future earnings prospects.

Of particular note, we find that the incidence of "big bath" behavior may be exaggerated.

Do firms use the deferred tax asset valuation allowance to manage earnings?

Therefore, it is not surprising that SEC Chairman Arthur Levitt criticized gimmicks such as big baths and the classification of merger costs as in process research and development, which can be written off immediately.

Impairment Write-Offs: Truth or Manipulation

Assuming that the procedures described above effectively simulated the impact of SFAS 121 (more frequent and smaller write-offs, fewer "big baths") on the ROA and ROE ratios, tests were conducted to determine if the differences between the actual and simulated amounts for each year were statistically significant.

Impairment Write-Offs: Truth or Manipulation?

IF you can afford it, celebrate your new closeness with a mini-break to a glamorous hotel, featuring big baths and soft beds.