The Other Side of Financial Statement Analysis

| January 30, 2017

Question
Do Numbers Lie? The Other Side of Financial Statement Analysis
If you were to enter the banking industry you may find yourself approving or not approving loans. The following is a good example of a common event you may encounter.

Company X is looking for a $100,000 to purchase new equipment. The finance manager for Company X recently presented financial reports. Upon further analysis of the statements you, the banker, noted some window dressing of financial statement. In this case it seems Company X will delay payments to vendors in order to make their cash position look higher.

Do you see this practice a matter of ethical and or legal concern?
Do you think most all company’s ‘window dress’ their data?
Please explain your decision to approve or disapprove Company x’s loan.

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