- 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: #711,222 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 discretionin reporting operating cash flow. In this era, when thetrustworthiness of reported earnings is in question, a reliance onas-reported operating cash flow is not the convenient substitutemeasure of financial performance that it might appear to be.
Creative Cash Flow Reporting: Uncovering SustainableFinancial Performance identifies how the routine application ofeither current accounting standards or other measures employed bysome companies can yield misleading operating cash flow statementsin financial analysis.
When adjusted using the methods described in this clear guide,operating cash flow is a more effective tool for uncoveringreported earnings that have been increased through questionablemeans. Premature or fictitious revenue will result in growingreceivables but not cash. Also, steps taken to misstate inventorymight boost gross profit and net income but will not reflect cashflow. The same is true about aggressive cost capitalization andother creative accounting acts.
Creative Cash Flow Reporting demonstrates how to useadjusted operating cash flow to uncover earnings that have beenmisreported by even the most aggressive and fraudulent accountingpractices.
Real-world practice is demonstrated through the results of astudy designed to adjust the cash flow statements of the S&P100 for the years 2000, 2001, and 2002. Many companies included inthis sample had significant differences between reported andadjusted operating cash flow. The book is illustrated usinghundreds of actual and recent company financial reports and appliesrecommendations to a large sample of actual companies.
Creative Cash Flow Reporting: Uncovering SustainableFinancial Performance is a must-have reference for seriousreaders of financial statements, including equity analysts andinvestors, credit professionals, serious individual investors,professional money managers, and anyone interested in uncoveringtrue sustainable financial performance.
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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.
In summary, this book is a "must have" for accountants and financial analysts, and I would strongly recommend for CEOs, COOs, corporate and securities attorneys, and corporate middle managers.
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."