Your summary is correct.
The topic belongs to a category that I call timeshifting – a topic on which I often comment on HC to disabuse the minds of folk who do not understand how rubbery accounting can be. In any reporting year, some expenses are taken up that either should have been recognised in the past, or which could philosophically best be ascribed to the future. Revenue too can at times be shifted to either puff-up the NPAT, or to hide some profit for the next year. Raising invoices late is one obvious way of shifting 12th-month revenue into the 1st-month revenue of the next near.
Exaggerating expenses can be achieved by depreciating too quickly, and that includes impairing depreciating assets when one can get away with it. When equipment is idle the problem is often sector wide, and hence the second-hand price of the equipment is low. The first factor, allows Management to impair the asset, and the second factor provides them with a supporting argument to make large impairments. If there is a turnaround, and the previously idle equipment that has been impaired is put to use, there may be nothing left to depreciate.
Management generally (not NWH specific) will at times want to bring expenses forward, and at times retard expense recognition to hide bad results. A few years ago BYL reported an ordinary NPAT, but achieved this by changing the depreciation from the straight-line method to a usage-based method. The turd hit the fan a few years later, in BYL's case.
One could write a tome on this time-shifting topic, because timeshifting can be effected in ways that look innocent, or may even be mandated by accounting standards. Even growing organically contains an element of timeshifting, which becomes patent if you invent two equal-in-size companies generating equal NPATs, and growing at the same rate, except one grows by acquisition, and the other organically. In effect, the company growing by acquisition is not debiting the cost of growth to an NPAT-affecting expense, but debiting instead balance sheet accounts like Goodwill, Customer Relations, et cetera.
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