Companies cook the books to meet tough targets: Survey

[D123]

for the third method, either the interest rate paid is too low or the cash move up but interest stay around the same.

For companies with very liquid assets or working capital, it is very easy to "window-dress" their quarterly financial statements.

For trading companies like Olam, Wilmar, Noble and China Aviation Oil, the cash you see there at the end of the quarter might actually have been used as working capital during the quarter and thus did not generate interest income. E.g for buying grains/seed/nuts/oil and then selling it all off before the quarter end to show that there is cash on the balance sheet.

Furthermore, the actual working capital required to generate their quarterly profits might actually be far bigger than the net value you see at the end of the quarter. E.g. there is a large revolving credit line with banks and these are used during the quarter but replenished at quarter end. So, what you have at the end of the quarter is not only a more liquid balance sheet, but also a seemingly smaller one, which means ROA might be overstated too.

The truth is I find it hard to get any accuracy on the balance sheets of such companies.

[Temperament]

for the third method, either the interest rate paid is too low or the cash move up but interest stay around the same.

For companies with very liquid assets or working capital, it is very easy to "window-dress" their quarterly financial statements.

For trading companies like Olam, Wilmar, Noble and China Aviation Oil, the cash you see there at the end of the quarter might actually have been used as working capital during the quarter and thus did not generate interest income. E.g for buying grains/seed/nuts/oil and then selling it all off before the quarter end to show that there is cash on the balance sheet.

Furthermore, the actual working capital required to generate their quarterly profits might actually be far bigger than the net value you see at the end of the quarter. E.g. there is a large revolving credit line with banks and these are used during the quarter but replenished at quarter end. So, what you have at the end of the quarter is not only a more liquid balance sheet, but also a seemingly smaller one, which means ROA might be overstated too.

The truth is I find it hard to get any accuracy on the balance sheets of such companies.

Hmm...
Another possible Jigsaw Puzzle. So must really understand the business mode or business operandi first before can really understand the AR's picture. No wonder people say if you don't really understand the business operandi, don't invest. Another words, business insiders are always having advantage over the public.
So how much can we understand a business operation by just going through it's AR? i suppose for some "difficult" businesses we can't or very little.