In this book, authors detail a number of gimmicks that companies have employed, including:
o Booking deliveries of computer software to resellers as sales,
despite undisclosed agreements permitting the return of unsold
merchandise for refunds.
o Helping managers to achieve their annual sales targets by
announcing a price increase, effective January 2, to induce
customers to order before year-end, even though the hike puts the
company out of line with the competition.
o Taking credit for volume-based rebates from suppliers before
purchases of merchandise reach the level needed to qualify for the
rebates.

Surprisingly, to many readers, the slipperiness depicted in Financial Statement Analysis is not limited to penny-stock companies or high-flying initial public offerings. A number of the books case studies involve widely respected Fortune 500 corporations. The authors quote an official of one such company who freely admits that when a division is in danger of missing its quarterly profit goal, management tries to make an acquisition in the waning days so that it can count the units earnings for the entire period.

Fridson and Alvarez do not merely describe and deplore opaque financial reporting practices. They document a number of cases in which analysts successfully anticipated stock and bond price shocks, using financial ratios and publicly available information from outside the statements. The authors also provide practical advice on making financial projections.


TABLE OF CONTENTS

Part. 1 Reading between the Lines
1 The Adversarial Nature of Financial Reporting

Part. 2 The Basic Financial Statements
2 The Balance Sheet
3 The Income Statement
4 The Statement of Cash Flows

Part. 3 Forecasts, Analysis, and Special Cases
5 Forecasting Financial Statements
6 Credit Analysis
7 Equity Analysis
8 Special Categories of Issuers

Glossary
Bibliography
Index