When CCP buys debts, these become long-term assets. Like any...

When CCP buys debts, these become long-term assets. Like any long-term asset, their value fluctuates over time. Things that can affect the long term value of these assets are:

- Are some debts deemed as no longer collectible?

- Are some debts that were deemed as no longer collectible now collectible?

- Are some debts simply partially impaired, in which case you partially write off those debts.

When assets are impaired, those adjustments are taken as a reduction of the asset, together with an expense on the income statement. CCP has been charging these impairments using the line "Impairment of goodwill" as far as I can tell. I have by no means researched their accounts deeply. I'm simply reflecting on what I believe their general model to be. Some basic explanation of that expense account is on page 24 and page 28 of the August 17 Financial Report. Also see Note 1 B g ii on page 29: "...purchased debt ledgers are measured at amortised cost using the effective interest method, less any impairment losses."

For me this is all very very good, not bad. CCP can adjust its earnings up or down at will, simply by impairing or unimpairing future earnings against long term debt assets. That is absolutely "gaming" their earnings. But I'm sure it is done legally, and I'm pretty sure they are good enough about it that they can survive a tax audit.

I agree with you cash flows are the best method for evaluating performance. That's exactly why I started this thread by asking are the current year cash flow figures reliable indicators of performance for the next few years, or were there one-time factors in those cash flow results that won't repeat so easily going forward.