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Financial Warnings: Detecting Creative Accounting Practices and Avoiding Earnings Surprises develops skills for identifying clues, available in the financial statements and related notes, that can be useful in anticipating future declines in corporate earnings and cash flow. Such performance declines might be caused by operational difficulties or by the application of aggressive or fraudulent accounting practices, or both. The titles used to announce these performance declines have many names, including "Asset write-offs", "unrecorded liabilities", "restructuring charges", "accounting irregularities", "inflated profits", and "earnings restatements". The circumstances surrounding these actions are typically unanticipated. The objective of Financial Warnings is to prepare students to better anticipate and avoid them.
Here are links to the three spreadsheets. The first, 3Co Analysis is a simple spreadsheet for analyzing 3 companies. A second spreadsheet, 6Co Analysis is a bit more sophisticated and designed to analyze six companies as an industry. Finally, Co Analysis is a spreadsheet designed to perform an in-depth analysis of a single company.
If you need to contact me, or have corrections for the spreadsheets, use my Georgia Tech EMail address: charles.mulford@mgt.gatech.edu
