Advanced issues in financial statement analysis.(TRADELINE)

While legislation in the wake of high-profile fraud cases has reduced the occurrence of financial fraud, many companies still use what are called "creative accounting techniques" to improve their appearance and more easily secure financing, much to the chagrin of B2B vendors. "The idea is that it's one thing when you're doing financial analysis and you're doing the ratios and you're doing the statements, but the problem though is how much faith you can put in those numbers," said D.J. Masson, Ph.D., CTP in his recent NACM-sponsored teleconference, "Advanced Issues in Financial Analysis." Masson suggested things to keep in mind while investigating the creditworthiness of potential customers and also delved into the motivations and reasons some companies resort to these techniques.

Despite the information and structure of U.S. generally accepted accounting principles, accounting for a company's assets and liabilities is still a very vague science. "By its very nature, if we're talking about accounting, it could be adhering 100% to GAAP, but at the same time there is some latitude," said Masson. "You want to paint your company in the best light, but there's a line." In his presentation, Masson went through a group of companies who had recently been charged with questionable accounting practices within the ...