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Acquisition Accounting Shenanigan No. 2: Inflating Reported Cash Flow
The Friday after Thanksgiving is generally considered the unofficial start of the holiday shopping season. Traditionally, it is one of the biggest shopping days of the year, if not the biggest. The day has long been called “Black Friday” since many people are hopeful that it will be the day when retailers move “into the black” (accounting slang for “turning a profit”) for the year. Every time Black Friday approaches, retailers are quick to remind us of all the holiday shopping we need to do. They offer huge sales and fill the airwaves and newsprint with “Shop ’til You Drop” advertisements trying to lure us into their stores.
Tyco and WorldCom seemed to adhere to the “Shop ...
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