It is difficult to overstate the importance of cash flow to overall corporate financial health. Our fundamental concepts of credit quality and valuation are based on projects of cash flow. Many investors, burned by the trust they have placed in reported earnings in an era of questionable accounting have turned their focus to cash flow as the only trustworthy measure of financial performance available. Yet, what has become disturbingly clear is that cash flow, and especially operating cash flow and free cash flow are not as trustworthy as many would like to believe. Managers have discretion in the reporting of cash flow amounts and often use it to mislead financial statement users. In the book this practice is termed creative cash flow reporting. The book identifies the more common steps employed to yield misleading cash flow amounts and demonstrates how to adjust and more effectively use the cash flow statement in analysis.
Book Details:
- Author: Charles W. Mulford
- ISBN: 9780470237731
- Year Published: 2005
- Pages: 432
- BISAC: BUS001000, BUSINESS & ECONOMICS/Accounting / General
About the Book and Topic:
It is difficult to overstate the importance of cash flow to overall corporate financial health. Our fundamental concepts of credit quality and valuation are based on projects of cash flow. Many investors, burned by the trust they have placed in reported earnings in an era of questionable accounting have turned their focus to cash flow as the only trustworthy measure of financial performance available. Yet, what has become disturbingly clear is that cash flow, and especially operating cash flow and free cash flow are not as trustworthy as many would like to believe. Managers have discretion in the reporting of cash flow amounts and often use it to mislead financial statement users. In the book this practice is termed creative cash flow reporting. The book identifies the more common steps employed to yield misleading cash flow amounts and demonstrates how to adjust and more effectively use the cash flow statement in analysis.
Creative Cash Flow Reporting capitalizes on the market’s interest in books on misleading financial reporting. No book on financial reporting and analysis has focused on misleading cash flow reporting. The consensus is that cash flow is trustworthy and not subject to manipulation. This book debunks that myth.
Charles Mulford and Eugene Comiskey are the authors of the best selling Financial Numbers Game; Identifies the more common steps employed to yield misleading cash flow amounts; Demonstrates how to adjust the cash flow statement form more effective analysis; Describes how to use adjusted operating cash flow in uncovering earnings that have been misreported using aggressive or fraudulent accounting practices; Applies recommendations to a large sample of actual companies; Includes a survey of financial professionals on their views regarding creative cash flow reporting by Certified Financial Officers (CFOs), lenders, Chartered Financial Analysts (CFAs) and CPAs.
About the Author
Charles W. Mulford, PH.D, CPA, has co-authored three books, including the best seller The Financial Numbers Game: Identifying Creative Accounting Practices, published in 2002. Dr. Mulford has appeared on numerous broadcast networks, including CNBC, ABC News, and Bloomberg TV. In addition, he has been quoted in several business publications, including The Wall Street Journal, Business Week, The Financial Times, and Fortune. He is Invesco Chair and Professor of Accounting in the DuPree College of Management at Georgia Tech. Dr. Mulford’s scholarly pursuits include the publication of numerous papers in scholarly as well as professional accounting and finance journals. His recent research interests have turned to the use of published financial reports in the prediction of financial distress. In addition to his work at Georgia Tech, Dr. Mulford regularly consults with major domestic and international commercial banks and money-management firms on issues related to credit and investment decision-making. Eugene E. Comiskey, PH.D, CPA, CMA, is Callaway Chair and Professor of Accounting in the DuPree College of Management at Georgia Tech. For over twenty year, Dr. Comiskey has consulted with commercial banks around the world. He has published numerous papers in a wide range of professional and academic journals. His research interests center on earnings forecasts, the relationship between accounting and market-based risk measures, the role of financial date in credit decisions and international financial reporting practices. He is the author of three books.