What’s next?
I hope that you agree that this chapter was relatively plain sailing across the duck pond. We will paddle on briskly to look at the other key financial statements and, ultimately, the detailed interpretation of them all taken in concert.
‘[Another] illusion played by some companies is using unrealistic assumptions to estimate liabilities for such items as sales returns, loans losses or warranty costs. In doing so, they stash accruals in cookie jars during the good times and reach into them when needed in the bad times. I’m reminded of one US company who took a large one-time loss to earnings reimburse franchisees for equipment. That equipment, however, which included literally the kitchen sink, had yet to be bought.’
—Arthur Levitt ...
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