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Accounting
Fraud
WorldCom
improperly booked $3.8 billion as capital expenditures, boosting
cash flow and profit over the past 5 quarters. This disguised the
actual net loss for 2001 and the first quarter of 2002. It is possible
that the accounting irregularities go back to 2000. In simple terms
WorldCom did not account for expenses when it incurred them, but
hid the expenses by pushing them into the future, giving the appearance
of spending less and therefore making more money. This apparent
profitability pleased investors who pushed the stock up to a high
of $64.51 in June 1999.
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