Financial Intelligence, Revised Edition: A Manager's Guide to Knowing What the Numbers Really Mean

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You Can’t Always Trust the Numbers

If you read the news regularly, you have learned a good deal in recent years about all the wonderful ways people find to cook their companies’ books. They record phantom sales. They hide expenses. They sequester some of their properties and debts in a mysterious place known as off balance sheet. Some of the techniques are pleasantly simple, like the software company a few years back that boosted revenues by shipping its customers empty cartons just before the end of a quarter. (The customers sent the cartons back, of course—but not until the following quarter.) Other techniques are complex to the point of near-incomprehensibility. (Remember Enron? It took years for accountants and prosecutors to sort out all ...