• Create BookmarkCreate Bookmark
  • Create Note or TagCreate Note or Tag
  • PrintPrint
Share this Page URL
Help

Chapter 6. Investigation: Verifying the ... > The Revealing Nature of Investigatio...

The Revealing Nature of Investigation

What exactly is a trend, and how can we best use it? In any study of trends, unexplained changes point the way to important information. This does not necessarily mean the books are being manipulated. Several other possible explanations may arise. One purpose in investigating changes is to ensure that we understand the underlying causes. The intent is always to better judge the likely long-term effect on value based on what is happening today. Because change is needed for progress, the study of trends has a twofold purpose. First is to understand how changes in trend direction affect long-term value (and how that change affects our perception about investment value); second is to make sure that the numbers are reliable and accurate, and that creative accounting is not being used to create an impression about the financial picture that is not entirely accurate.

Key Point: Our trend analysis serves two purposes: to determine how a trend affects value and to ensure that we are getting realistic numbers to begin with.



PREVIEW

                                                                          

Not a subscriber?

Start A Free Trial


  
  • Creative Edge
  • Create BookmarkCreate Bookmark
  • Create Note or TagCreate Note or Tag
  • PrintPrint