How Companies Manipulate Cash Flow

[@ryner.k4963]

I really like this kind of topic, that nobody teaches u in school, my lecturer just told me to practice hard to score in accounting. Everyone knows how to workout financial statements with spreadsheets, not everyone can manipulate/detect discrepancies from financial statements.

[@Edspira]

I'm glad you found the video helpful!

[@jd5787]

Super timely. I was looking for exactly this info! Thanks. Any plans to dig deeper into this topic?

[@Edspira]

Glad you found the video helpful! This is the last video in a 27-video playlist on financial statement analysis. I might make more videos on cash flow manipulation in the future, but the next series I'm going to roll out is about IFRS 16 (leases). After that I'm producing a series on ALM (asset-liability management) for banks

[@Unknowledgeable1]

@@Edspira thanks for the video! I'm pretty interested in this financial statement manipulation topic. Do you think auditors or forensic accountants would have a lot of knowledge on this topic?

[@atulbakshi8949]

This lesson was really helpful, thanks for enlightening.

[@vinhnguyen3199]

I have subscribed many channels, but I believe this is the best channel with greatest explanations

[@Edspira]

Wow, thank you!

[@JonesDawg]

Thank you Professor!

[@scooby7877]

What would tell you about the opposite, if net income is negative and OCF is positive

[@jaysonvalbarez935]

if you think about it, if net income is negative you have more expenses than revenue. if you have a positive OCF it's more related to balance sheet items, maybe you have a bunch of collectibles that haven't been recorded as revenue which will result in a positive OCF, which is one of the reasons for having a negative NI. this is only one scenario

[@dmba2582]

Isnt delaying account payables and improving account receivables (perhaps through supplier financing mechanism) a legit way to optimize working capital?

[@Edspira]

There's nothing wrong with delaying payables to improve working capital. But if a company's operating cash flow increased by from $4 billion to $6 billion simply because accounts payable went up by $2 billion, you shouldn't expect a similar increase the next period. There's a limit to how long you can make your suppliers wait for payment; eventually, they'll stop being your supplier

[@tomarshivang]

But don't you feel, it doesn't matter while doing the analysis for long period of time for e.g. say 5 or 10 years? I mean they can't delay these things forever.

[@Edspira]

That is correct, but managers of publicly-traded companies are often focused on the short-term

[@najblack5956]

Won’t this make their taxes higher ?

[@summerbreeze5115]

Why?