Financial Manipulation Signals In IPO Financial Statements

< p > < strong > 1, accounts receivable < /strong > /p >

< p > accounts receivable increased significantly, and the growth rate was higher than that of the same period. The turnover rate of accounts receivable was lower than that of the same industry, or showed a downward trend.

The above information often indicates two kinds of manipulation possibility. First, the company may relax the credit policy temporarily, and promote the income increase in the short term; two, it is possible for the company to have an early recognition of income or fictitious income.

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< p > < strong > 2, prepaid account < /strong > /p >

< p > the growth of prepaid accounts, especially the unreasonable growth of prepaid projects or prepaid or non patented technology purchases, may lead to a profit increase by outflow of funds in advance and eventually outflow of funds.

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< p > < strong > 3, inventory < /strong > /p >

< p > inventory, especially the inventory with uncertain quantity and value, has increased significantly, and the growth rate has exceeded the same period of cost growth. The inventory turnover rate is lower than that of the same industry level, or showing a downward trend. It often indicates several manipulation possibilities. First, it is possible to purchase outflow funds through fictitious inventory, and finally to increase profits indirectly; two, by reducing the unit consumption in production, reducing the unit cost of products and increasing the quantity of products, and ultimately forming fictitious profits; three, the backlog of inventory, but should not mention a large number of declining price preparations and form a profit margin.

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< p > < strong > 4, under construction project < /strong > /p >

< p > in construction projects, because of the high total cost, the difficulty of determining the progress of the project and the fact that the actual cost is difficult to measure, it is a common hidden subject of virtual profit.

The huge increase in construction projects, especially the continuous increase that is not suited to the scale of production and development and development plans, often indicates two possible manipulating possibilities. First, the funds are pferred out of the construction projects and eventually the fictitious profits are finally formed. Two, the expenditure that should be paid in the current period is packaged into the cost of the construction projects.

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< p > < strong > 5, intangible assets < /strong > /p >

< p > procurement of intangible assets, mainly refers to the procurement of patent or non patented technology, which has the characteristics of no physical paction, unfairness in price fairness, and unrecognized use after purchase. It is a common hidden subject of virtual profit calculation.

The huge increase in outsourcing technology, especially the continuous increase in outsourcing technology, which is not very relevant to the current production and operation, often indicates that the funds are pferred out of the intangible assets and eventually become fictitious profits.

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< p > < strong > 6, goodwill < /strong > < /p >

< p > according to accounting standards, goodwill is only acquired under the same control.

Since goodwill does not amortize, it only needs to carry out the impairment test. It is often difficult to determine whether it is necessary to calculate the impairment, so it is a common hidden subject of virtual profit calculation.

The amount of goodwill depends on the fair value of the purchase price and the identifiable net assets of the acquirer, and whether the intangible assets recorded by the acquirer are identifiable as identifiable assets, which has great influence on the fair value of identifiable net assets. The key to whether the intangible assets should be identified is whether it can be separated and measured separately.

The recognized intangible assets usually need to be amortized after the acquisition. Therefore, under the same conditions, the higher the fair value of the unrecorded intangible assets recognized, the less the goodwill value is confirmed. The intangible assets need to be amortized, which will have a huge impact on the profits after the acquisition.

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< p > goodwill increases substantially, and even the purchase price mostly forms goodwill. It often indicates two possibilities. First, it colludes and raises the purchase price through collusion with the selling party, and pfers the false high funds to make profits. The two is that the fair value of the identifiable net assets is too low, especially deliberately ignoring or suppressing the fair value of the intangible assets of the M & A assets, so as to increase profits by amortization or less amortization.

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< p > < strong > 7, deferred income tax assets < /strong > /p >

< p > accounting standards stipulate that the recognition of deferred income tax assets shall be limited to the amount of taxable income that is likely to be deducted for deductible temporary differences in the future period, and the taxable income in the future period involves more accounting estimates.

The virtual calculation of deferred income tax assets is often based on the estimation of future deductible losses. It is generally understood that the deferred income tax assets recognized as deductible losses are more radical in accounting methods and often belong to a performance whitewash.

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< p > < strong > 8, payable employees' salary < /strong > /p >

"P" is a common method to regulate profit by the advance of employees' salary, especially the advance of non fixed wages such as year-end bonus and benefit bonus.

The balance of payable employees' salaries fluctuates greatly at the end of each year, and the amount of discrepancy in each year is large. However, the difference in the actual amount of wages is not large, which often indicates that the performance is smoothed through the free prepayment of wages.

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< p > < strong > 9, business income < /strong > /p >

< p > abnormal income characteristics include: first, incidental, including occasional trading patterns, occasional products, casual customers, etc. Two, the paction object does not have physical form or does not have reasonable uses for counterparties, such as selling software products, providing technical services and other income; three, paction prices deviate significantly from normal market prices.

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< p > strong > 10, < a href= "http://www.91se91.com/news/index_c.asp" > gross profit margin < /a > /strong > /p >

< p > the gross profit margin depends on the sales structure of different products and the gross profit rate of different products. Gross profit rate depends on unit price and unit cost. Unit cost includes material cost, labor cost and cost cost, among which material cost is often relatively large, and material cost is affected by two factors: raw material consumption level and raw material unit cost.

The abnormal gross profit rate can be subdivided into abnormal sales structure, abnormal unit price, abnormal raw material unit cost and abnormal consumption of raw materials. Whether there is any anomaly is mainly judged by continuous comparison of relevant indicators in different periods, comparison of gross profit between industries, comparison of unit price or single purchase price and market price.

The unexplained gross margin is usually representative of possible financial manipulation.

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< p > < strong > 11, period expense rate < /strong > /p >

During the period of < p >, the cost rate mainly refers to the ratio of two period expenses to the main business income.

The cost rates of different industries are different, but there is usually a comparability between the same industries.

If the period fee rate is lower than the same industry level or the period cost continues to decline, it often indicates that there may be financial manipulation.

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< p > some cost items have a linear relationship with income, such as sales and pportation costs, sales revenue and sales commission, export revenue and customs fees.

If there is no relatively stable relationship between related expense items and income, it often indicates that there may be financial manipulation.

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< p > strong > 12, a href= < http://www.91se91.com/news/index_c.asp > cash flow < /a > /strong > /p >

< p > operating cash flow is always negative, or is seriously deviated from net profit. It often indicates that there may be performance manipulation. The sudden increase in operating cash flow in the last year may indicate that in the last year, the cash flow will be whitewashed by accelerating the collection and delaying payment. Operating cash flow is consistently better than the same industry level, but at the same time, the investment cash flow will continue to be a large negative number, and there may be a combination of income fraud. Cash is first packaged as an investment cash outflow and then packaged into a business cash flow inflow.

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