Companies sometimes manipulate the financial statements, whether through earnings management or outright fraud. Here are some ways to determine whether a company has manipulated its financial statements: (1) ratio analysis (2) trend analysis (3) industry comparison (4) review critical estimates or assumptions (5) look for changes in accounting methods or estimates (6) look for changes in credit policy (7) look for large deviations between net income and operating cash flow (8) look for an inventory build-up (9) check for abnormally high shipments/sales right before the end of the period (10) compare sales figures to sales/shipment data from a third party (11) examine one-time charges (12) look for reversals of charges from prior periods (13) note whether the company is "lending" money to customers to buy its product (14) identify whether routine costs are being capitalized (15) identify off-balance sheet arrangements (16) identify related-party transactions Edspira is the creation of Michael McLaughlin, who went from teenage homelessness to a PhD. Edspiras mission is to make a high-quality business education accessible to all people. SUBSCRIBE FOR A FREE 53-PAGE GUIDE TO THE FINANCIAL STATEMENTS * http://eepurl.com/dIaa5z LISTEN TO THE SCHEME PODCAST * Apple Podcasts: https://podcasts.apple.com/us/podcast/scheme/id1522352725 * Spotify: https://open.spotify.com/show/4WaNTqVFxISHlgcSWNT1kc * Website: https://www.edspira.com/podcast-2/ CONNECT WITH EDSPIRA * Website: https://www.edspira.com * Blog: https://www.edspira.com/blog/ * Facebook page: https://www.facebook.com/Edspira * Facebook group: https://www.facebook.com/groups/561316587899818// * Reddit: https://www.reddit.com/r/edspira * LinkedIn: https://www.linkedin.com/company/edspira CONNECT WITH MICHAEL * Website: http://www.MichaelMcLaughlin.com * LinkedIn: https://www.linkedin.com/in/prof-michael-mclaughlin * Twitter: https://www.twitter.com/Prof_McLaughlin * Facebook: https://www.facebook.com/prof.michael.mclaughlin * Snapchat: https://www.snapchat.com/add/prof_mclaughlin *Twitch: https://twitch.tv/prof_mclaughlin * Instagram: https://www.instagram.com/prof_mclaughlin *TikTok: https://www.tiktok.com/@prof_mclaughlin

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While we usually think of companies manipulating earnings, they can also manipulate cash flow. In particular, companies have an incentive to manipulate operating cash flow. Companies achieve this by: (1) shifting cash inflows from the investing or financing section to the operating section of the statement of cash flows (2) shifting cash outflows from the operating section to the investing or financing section of the statement of cash flows (3) boosting operating cash flow with one-time activities Edspira is the creation of Michael McLaughlin, who went from teenage homelessness to a PhD. Edspiras mission is to make a high-quality business education accessible to all people. SUBSCRIBE FOR A FREE 53-PAGE GUIDE TO THE FINANCIAL STATEMENTS * http://eepurl.com/dIaa5z LISTEN TO THE SCHEME PODCAST * Apple Podcasts: https://podcasts.apple.com/us/podcast/scheme/id1522352725 * Spotify: https://open.spotify.com/show/4WaNTqVFxISHlgcSWNT1kc * Website: https://www.edspira.com/podcast-2/ CONNECT WITH EDSPIRA * Website: https://www.edspira.com * Blog: https://www.edspira.com/blog/ * Facebook page: https://www.facebook.com/Edspira * Facebook group: https://www.facebook.com/groups/561316587899818// * Reddit: https://www.reddit.com/r/edspira * LinkedIn: https://www.linkedin.com/company/edspira CONNECT WITH MICHAEL * Website: http://www.MichaelMcLaughlin.com * LinkedIn: https://www.linkedin.com/in/prof-michael-mclaughlin * Twitter: https://www.twitter.com/Prof_McLaughlin * Facebook: https://www.facebook.com/prof.michael.mclaughlin * Snapchat: https://www.snapchat.com/add/prof_mclaughlin *Twitch: https://twitch.tv/prof_mclaughlin * Instagram: https://www.instagram.com/prof_mclaughlin *TikTok: https://www.tiktok.com/@prof_mclaughlin

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