Financial warnings

by Charles W. Mulford

A material difference between a corporation's expected and actual earnings, otherwise known as an earnings surprise, can spell big trouble for lenders and equity investors, to say nothing of the company in question. The failure to anticipate a negative result can threaten a lender's prospects for loan repayment, cause investors to absorb heavy losses, and trigger substantial losses on positions in equity securities. Dedicated to the principle that "forewarned is forearmed," this book provides accountants and other users of financial statements with the resources needed to avoid these damaging financial discrepancies. Charles Mulford and Eugene Comiskey employ numerous case studies to examine and define these discrepancies and classify earnings surprises according to their major causes: changing economics, fraud, and aggressive application of GAAP. They then examine the results of a survey of bankers and develop a system for rating earnings surprise potential. This Earnings Reversal Sco