How one can mislead cash flow from operation in balance sheet..
There are 3 ways companies can fool analyst in Operating cash flow.
- First – Cash flow reporting from discontinued operations, cash overdrafts, purchases and sales of trading securities and capitalizing operatiing costs.
- Second – Taxes on Non operating gains and losses and the tax benefit from stock options.
- Third – reporting of nonrecurring sources and uses of operating cash flow.Non recurring results from accounts receivable securitisations, and the increased use of vendor financing.
Discontinued Operation
Companies might add cash from discontinued operations to the running operations, to look cash flow attractive. I need to know whether GAAP has mandated companies to disclose discontinued companies.
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