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Financial Warnings
A Comprehensive, Accessible, and Innovative Approach to
a Potentially Devastating Problem.
When a firm's actual earnings fall significantly short of expectations,
it's not just the company that suffers. Lenders, equity investors,
accountants, auditors, and consultants can also take a hit from
this "earnings surprise."
Financial Warnings is designed for one purpose—to make sure
that such a shortfall never undermines your financial security.
Clearly and systematically, this unique practical guide helps
you:
- Understand the many causes of earnings surprises, including
fraud, overstated revenues, undervalued liabilities, and many
more
- Identify the early warning signals associated with particular
earnings surprises, so you can take prompt corrective action
- Prevent earnings surprises from happening in the first place
by improving the quality of earnings forecasts
Financial Warnings comes complete with a unique early
warning system to put you on the alert for potential trouble,
foolproof checklists to help you spot those "yellow flags,"
a convenient sustainable earnings worksheet to sharpen your earnings
forecasts, and plenty of vivid case histories to show you how
to anticipate and avoid earnings surprises—not just on paper,
but in the real world.
A material difference between a corporation's expected and actual
earnings, otherwise known as an earnings surprise, can spell big
trouble for lenders and equity investors, to say nothing of the
company in question. The failure to anticipate a negative result
can threaten a lender's prospects for loan repayment, cause investors
to absorb heavy losses, and trigger substantial losses on positions
in equity securities.
Dedicated to the principle that "forewarned is forearmed,"
this book provides accountants and other users of financial statements
with the resources needed to avoid these damaging financial discrepancies.
Charles Mulford and Eugene Comiskey employ numerous case studies
to examine and define these discrepancies and classify earnings
surprises according to their major causes: changing economics,
fraud, and aggressive application of GAAP. They then examine the
results of a survey of bankers and develop a system for rating
earnings surprise potential. This Earnings Reversal Score concisely
categorizes cautionary signals, such as profitability, liquidity,
and management-related early warnings, enabling accountants to
recognize problems and take timely corrective measures.
Financial Warnings helps improve the quality of earnings forecasts
as well. With the aid of a detailed worksheet and a pair of extended
case studies, you'll learn how to locate material nonrecurring
items—a major cause of earnings surprises—and determine
a firm's sustainable earnings base more accurately. You'll discover
how to pinpoint differences in the book and market values of assets
and liabilities, which, if undetected, can also result in earnings
surprises. In addition, you'll learn the early warning indicators
of fraudulent financial reporting, as well as crucial information
on the role and responsibility of auditors in detecting such fraud.
An important resource for accountants, executives, CFOs, and
company auditors, Financial Warnings is an indispensable guide
for investors and others who depend on the accuracy of earnings
projections. Even if you have only a tentative understanding of
basic accounting issues, this easily accessible presentation will
help you develop the knowledge and skills you need to formulate
more accurate earnings expectations and avoid the potential disasters
caused by earnings surprises.
What's Included:
1 Hardcover Book, 496 pages pages, April 1996
Authors: Charles W. Mulford, Eugene E. Comiskey
Format: Hardcover
Item #: 978-0-471-12044-5
Price: $170.00(US)
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