Business Intelligence Center

Gaming the Numbers: Who Really Wins When Companies Fudge Year-end Results?

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Abstract:: Executives confronted with an intense pressure to meet quarterly- and year-end performance scores are faced with an awkward decision: Put their organization and their suppliers and customers through a few weeks of rigorous boot camp to create the illusion of a good quarter and overall year in terms of performance; or take action early in the year to generate sustainable cash flow improvements every day of every quarter.
Why companies play these games is simple. There are performance levels that are expected and when they are not met, Wall Street’s inevitable knee jerk reaction can adversely affect the organization’s share price.
While we understand why companies game their numbers in the fourth quarter, we do not agree with it, or the need to do it.
Our analysis shows a $100 billion working capital improvement, although nothing has really been gained thanks to a $122 billion deterioration in the very next quarter.

DETAILS: Sponsored by: REL; Posted: February 14, 2008; Length: 8 pages; Format: PDF (590 kb); Email this abstract; These white papers are not created by the CFO.com editorial staff. In order to view these papers, you must register with CFO.com and agree to share your contact information with related product/service companies.

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