- Hardcover: 414 pages
- Publisher: Wiley; 1 edition (January 20, 2005)
- Language: English
- ISBN-10: 0471469181
- ISBN-13: 978-0471469186
- Product Dimensions: 7.4 x 1.4 x 10.3 inches
- Shipping Weight: 2 pounds (View shipping rates and policies)
- Average Customer Review: 19 customer reviews
- Amazon Best Sellers Rank: #289,949 in Books (See Top 100 in Books)
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Creative Cash Flow Reporting: Uncovering Sustainable Financial Performance 1st Edition
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"This book is a must-have reference for anyone interested in serious financial statement analysis and uncovering manipulations to earnings from creative reporting of cash flows." (Graziado Business Report.com; Issue 4, Vol 10, 2007)
From the Inside Flap
Contrary to popular opinion, managers have a degree of discretion in reporting operating cash flow. In this era, when the trustworthiness of reported earnings is in question, a reliance on as-reported operating cash flow is not the convenient substitute measure of financial performance that it might appear to be.
Creative Cash Flow Reporting: Uncovering Sustainable Financial Performance identifies how the routine application of either current accounting standards or other measures employed by some companies can yield misleading operating cash flow statements in financial analysis.
When adjusted using the methods described in this clear guide, operating cash flow is a more effective tool for uncovering reported earnings that have been increased through questionable means. Premature or fictitious revenue will result in growing receivables but not cash. Also, steps taken to misstate inventory might boost gross profit and net income but will not reflect cash flow. The same is true about aggressive cost capitalization and other creative accounting acts.
Creative Cash Flow Reporting demonstrates how to use adjusted operating cash flow to uncover earnings that have been misreported by even the most aggressive and fraudulent accounting practices.
Real-world practice is demonstrated through the results of a study designed to adjust the cash flow statements of the S&P 100 for the years 2000, 2001, and 2002. Many companies included in this sample had significant differences between reported and adjusted operating cash flow. The book is illustrated using hundreds of actual and recent company financial reports and applies recommendations to a large sample of actual companies.
Creative Cash Flow Reporting: Uncovering Sustainable Financial Performance is a must-have reference for serious readers of financial statements, including equity analysts and investors, credit professionals, serious individual investors, professional money managers, and anyone interested in uncovering true sustainable financial performance.
Top customer reviews
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A couple of suggestions if the authors are reading. The book needs an edition update. There have been some FASB rule changes for operating cash flows since this book was published back in 2003.
Also what would be very helpful is to point out where in the shareholder reports certain cash flow items can be found, perhaps with examples and copy/paste of the example stocks details as pulled from the quarterly or annual shareholder reports.
But this is a must read for those who wish to live on the dividends their investments create.
Forget what you think you know about accounting. His book and classes are a great bridge between theory and practice.
Cash flow exhibits are illustrated and discussed throughout the book with large corporations that you will immediately recognize.
As I began to read this book, I became very aware that these authors are intensely well versed in this field. It states on p 32 that "by now the reader should be well aware that reported cash flow is not necessarily what it seems." As the reader I would agree with this statement. I read this book as part of a CPE class. This was a win win opportunity for me. I earned credits and learned about cash flow statements shenanigans.
Other notes worth mentioning:
p254-257 has an exhibit of a Sustainable Operating Cash Flow Worksheet to assist the reader on their understanding of "organizing and recording non-operating & nonrecurring items of operating cash flow.
Chp 8 - Using operating cash flow to detect earnings problems-discussion includes cyclical developments and life cycles of an organization.
p 290-300 ECM- excess cash margin is discussed as a beneficial statistical measure when analyzing a cash flow payment. p 294 states "it is the most effective in uncovering reported earnings that have been boosted by artificial means". p297 mentions that "ECM provides a useful alert mechanism for identifying developing problems early."
- Mariusz Skonieczny, author of Why Are We So Clueless about the Stock Market? Learn how to invest your money, how to pick stocks, and how to make money in the stock market