Companies, Investing and Creative Accounting

Investing and Creative Accounting
Investing and Creative Accounting

The science of math is not only restricted to eccentric nerds…

Call it what ever you want:

Creative accounting, messing or fooling around with the numbers, the fact of the matter is that this “math” has taken a place on business accounting.

Executives and many other managers often benefit for sometimes long periods of time before their mathematical operations are fully exposed.

On the other hand many investors are often left standing in the cold with empty pockets!

The majority of analysts, investors, and newspeople are many times intrigued by certain companies sudden growth scenarios.

And although such stories do last for quite a long time, they are far from clear.

The business community has many times seen its share of paper wealth to be demolished into absolute shambles.

The dot-com bubble itself was fueled and failed by creative accounting.

Companies and Creative Accounting

Many companies are getting busy with their creative accounting procedures and scenarios and add a significant paper boost to their gross profit margins.

They are so eager to record the sales at full value that they also hide many kinds of costs.

One might argue that such companies are misinforming investors by emphasizing gross revenues.

Investors must keep guard against such creative accounting practices and…

Maintain a close monitoring on the revenues, profits and market share of the companies.