Creative Cash Flow Reporting : Uncovering Sustainable Financial Performance

by Mulford, Charles W.; Comiskey, Eugene E.

• ISBN13: 9780471469186
• ISBN10: 0471469181
• Edition: 1st
• Format: Hardcover
• Copyright: 2005-01-20
• Publisher: WILEY

Summary

Successful methodology for identifying earnings-related reporting indiscretions Creative Cash Flow Reporting and Analysis capitalizes on current concerns with misleading financial reporting on misleading financial reporting. It identifies the common steps used to yield misleading cash flow amounts, demonstrates how to adjust the cash flow statement for more effective analysis, and how to use adjusted operating cash flow to uncover earnings that have been misreported using aggressive or fraudulent accounting practices. Charles W. Mulford, PhD, CPA (Atlanta, GA), is the coauthor of three books, including the bestselling The Financial Numbers Game: Identifying Creative Accounting Practices. Eugene E. Comiskey, PhD, CPA, CMA (Atlanta, GA), is the coauthor of the bestselling The Financial Numbers Game: Identifying Creative Accounting Practices.

Author Biography

Charles W. Mulford, PhD, CPA, is Invesco Chair and Professor of Accounting in the College of Management at the Georgia Institute of Technology in Atlanta. He has coauthored three books, including the bestselling The Financial Numbers Game, published by Wiley. He has appeared on numerous broadcast networks, including CNBC, ABC News, and Bloomberg TV. He regularly consults with major domestic and international commercial banks and money management firms on issues related to credit and investment decision-making.

Eugene E. Comiskey, PhD, CPA, CMA, is Associate Dean for Faculty and Research, Callaway Chair, and Professor of Accounting in the College of Management at the Georgia Institute of Technology in Atlanta. For more than twenty years, he has consulted with commercial banks around the world. He is the coauthor of three books, including The Financial Numbers Game, and has published numerous papers in a wide range of professional and academic journals.

Table of Contents

Foreword	xi
Preface	xiii
About the Authors	xv
Seeking Sustainable Cash Flow	1	(36)
An Artificial Boost to Operating Cash Flow	3	(2)
Classifying Cash Flow	5	(4)
Sustainable Cash Flow	9	(9)
Creative Cash Flow Reporting	18	(11)
Ignoring the Statement of Cash Flows	29	(1)
Cash Flow Analysis	30	(2)
Plan of This Book	32	(1)
Summary	33	(4)
Structure of the Statement of Cash Flows	37	(44)
Historical Background	38	(11)
Arrival of the Statement of Cash Flows	49	(19)
Non-GAAP Measures of Cash Operating Performance	68	(5)
International Differences in the Statement of Cash Flows	73	(1)
Summary	74	(7)
Is It Operating or Investing Cash Flow?	81	(40)
Investing Cash Flow	86	(5)
GAAP Flexibility: Is It Operating or Investing Cash Flow?	91	(23)
Beyond the Boundaries of GAAP	114	(2)
Summary	116	(5)
Is It Operating or Financing Cash Flow?	121	(38)
Financing Cash Flow	125	(6)
GAAP Flexibility: Is It Operating or Financing Cash Flow?	131	(23)
Beyond the Boundaries of GAAP	154	(1)
Summary	155	(4)
Income Taxes and the Statement of Cash Flows	159	(50)
Tax Reporting Essentials	160	(6)
Classification of Tax-Related Cash Flow	166	(14)
Nonrecurring Income Tax Cash Flows	180	(23)
Summary	203	(6)
Nonrecurring Sources and Uses of Operating Cash Flow	209	(32)
Characteristics of Nonrecurring Items of Operating Cash Flow	211	(1)
Examples of Nonrecurring Cash Sources and Uses	211	(2)
Management Identification of Nonrecurring Operating Cash Flow	213	(5)
Locating Nonrecurring Items of Operating Cash Flow	218	(13)
Cash Flow Tracking	231	(4)
Summary	235	(6)
Measuring Sustainable Operating Cash Flow	241	(28)
Sustainable Operating Cash Flow	242	(2)
Calibrating Operating Cash Flow Adjustments	244	(8)
Measuring Sustainable Operating Cash Flow	252	(5)
Completed Sustainable Operating Cash Flow Worksheet	257	(5)
Frequency and Size of Adjustment Items	262	(3)
Summary	265	(4)
Using Operating Cash Flow to Detect Earnings Problems	269	(36)
Relationship between Earnings and Operating Cash Flow	271	(13)
Earnings Supported by Artificial Means	284	(6)
Excess Cash Margin	290	(10)
Summary	300	(5)
Analyzing Operating Cash Flow	305	(40)
Cash Flow Analysis Statement	308	(6)
Using the Cash Flow Analysis Statement	314	(11)
Cash Flow Drivers	325	(11)
Closer Look at Core Operating Cash Flow	336	(5)
Summary	341	(4)
Understanding Free Cash Flow	345	(34)
Uses of Free Cash Flow	348	(10)
What Is Free Cash Flow?	358	(4)
Free Cash Flow to Common Equity: A Closer Look	362	(8)
Capital Expenditures	370	(5)
Acquisitions and Free Cash Flow	375	(1)
Summary	375	(4)
Glossary	379	(16)
Subject Index	395	(14)
Company Index	409