Thread by @Finology_Quest

Some ways in which companies manipulate their financials ⚠️

• By showing revenue before it is realised.
• Not showing expenses or delaying it by a year.
• By showing high Miscellaneous expenses.

There are 10+ ways by which companies fool you.

Lets find out ⤵️

#stocks

Financials can be manipulated in ⚠️

1. Profit and Loss Account
2. Balance Sheet
3. Cash Flow Statement

#StockMarketindia

⚠️ Profit & Loss Account

• Company using highly Volatile Depreciation rates.

• Company having very low CFO/EBITDA ratio in last 5-10 years.

• Showing low debt provisions which results in high earnings.

• Counting non-existent inventory.

⚠️ Balance Sheet

• The company has done capex but no proof or evidence to support it.

• Shifting its debt to special purpose entities

• Transferring normal expenses to balance sheet to increase profits

#invest #ScamAlert

⚠️ Some 𝗤𝘂𝗲𝘀𝘁 𝗖𝗵𝗲𝗰𝗸𝘀 you can do

• High contingent liability over the long term.

• High Auditor remuneration.

• Frequent changes in accounting policies.

#salary #nifty50

Financial statements are the most important tool to identify good quality stocks.

But we have to be aware of such manipulations by the company.

➡️Know how to analyse financial statements like a pro by legend of Unacademy CA Nishant Kumar on quest.finology.in/courses/how-to…