THE FINANCIAL NUMBERS GAME

Praise for The Financial Numbers Game "So much for the notion 'those who can, do-those who can't, teach.' Mulford and Comiskey function successfully both as college professors and real-world financial mercenaries. These guys know their balance sheets. The Financial Numbers Game should serve as a survival manual for both serious individual investors and industry pros who study and act upon the interpretation of financial statements. This unique blend of battle-earned scholarship and quality writing is a must-read/must-have reference for serious financial statement analysis." -Bob Acker, Editor/Publisher, The Acker Letter "Wall Street's unforgiving attention to quarterly earnings presents ever-increasing pressure on CFOs to manage earnings and expectations. The Financial Numbers Game provides a clear explanation of the ways in which management can stretch, bend, and break accounting rules to reach the desired bottom line. This arms the serious investor or financial analyst with the healthy skepticism required to drive beyond reported results to a clear understanding of a firm's true performance." -Mark Hurley, Managing Director, Training and Development Global Corporate and Investment Banking, Bank of America "After reading The Financial Numbers Game, I feel as though I've taken a master's course in financial statement analysis. Mulford and Comiskey's latest book should be required reading for anyone who is serious about fundamentally analyzing stocks." -Harry Domash, Investing Columnist, San Francisco Chronicle and Publisher, Winning Investing The Financial Numbers Game identifies the steps businesses may take to misstate financial performance and helps its readers to identify those situations where reported results may not be what they seem.

CHARLES W. MULFORD is Invesco Chair and Professor of Accounting and EUGENE E. COMISKEY is Callaway Chair and Professor of Accounting in the DuPree College of Management at the Georgia Institute of Technology in Atlanta. Both have doctorates in accounting and are professionally qualified as Certified Public Accountants. They also actively consult with lenders at commercial banks in the United States and abroad. Professors Mulford and Comiskey have published numerous articles on financial reporting and analysis issues in leading academic and professional journals. Their other books include Financial Warnings and Guide to Financial Reporting and Analysis.

1. Financial Numbers Game.

Rewards of the Game.

Classifying Creative Accounting Practices.

Plan of This Book.

Summary.

Glossary.

Notes.

2. How the Game Is Played.

Accounting Policy Choice and Application.

Fraudulent Financial Reporting.

Cleaning Up after the Game.

Clarifying Terminology.

Summary.

Glossary.

Notes.

3. Earnings Management: A Closer Look.

What Is Earnings Management?

Incentives and Conditions for Earnings Management.

Earnings Management Techniques.

Evidence of Earnings Management.

Effectiveness of Earnings Management.

Is Earnings Management Good or Bad?

Summary.

Glossary.

Notes.

4. The SEC Responds.

The Chairman's Speech.

The Action Plan.

Subsequent Developments.

Enforcing the Securities Laws.

Summary.

Glossary.

Notes.

5. Financial Professionals Speak Out.

Survey of Financial Professionals.

Survey Results.

Summary.

Glossary.

Notes.

6. Recognizing Premature or Fictitious Revenue.

Is It Premature or Fictitious Revenue?

When Should Revenue Be Recognized?

Detecting Premature or Fictitious Revenue.

Checklist to Detect Premature or Fictitious Revenue.

Summary.

Glossary.

Notes.

7. Aggressive Capitalization and Extended Amortization Policies.

Cost Capitalization.

Detecting Aggressive Cost Capitalization Policies.

Amortizing Capitalized Costs.

Detecting Extended Amortization Periods.

Checklist to Detect Aggressive Capitalization and Extended Amortization Policies.

Summary.

Glossary.

Notes.

8. Misreported Assets and Liabilities.

Link with Reported Earnings.

Boosting Shareholders' Equity.

Overvalued Assets.

Undervalued Liabilities.

Checklist to Detect Misreported Assets and Liabilities.

Summary.

Glossary.

Notes.

9. Getting Creative with the Income Statement: Classification and Disclosure.

Current Income Statement Requirements and Practices.

Reporting Comprehensive Income.

Creative Income Statement Classifications.

Creativity with Other Aspects of the Income Statement.

Summary.

Glossary.

Notes.

10. Getting Creative with the Income Statement: Pro-Forma Measures of Earnings.

Recasting the Bottom Line: Pro-Forma Earnings Measures.

Summary.

Glossary.

Notes.

11. Problems with Cash Flow Reporting.

Reporting Cash Flow.

Problems with Reported Operating Cash Flow.

Using Operating Cash Flow to Detect Creative Accounting Practices.

Checklist for Using Operating Cash Flow to Detect Creative Accounting Practices.

Summary.

Glossary.

Notes.

Subject Index.

Company Index.