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Chapter 6. Growing Mushrooms: The Art of... > Red Flag 3: When the Earnings Table ...

Red Flag 3: When the Earnings Table Is Produced in a Creative or Confusing Manner

There is a standard format for an earnings table, and when companies don’t keep to it, investors should be suspicious that something is being hidden. Look out for the absence of comparable numbers for the year-earlier quarter, the use of non-comparable periods (three months and one week against three months), the absence of a table altogether, or the absence of the bottom-line net profit figures. All these kinds of deviations should put investors on their guard. During the Internet boom, the imaginative accountants and image men used all these tactics and more.


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