Silly Business: Why Playing Games with Year-end Results is a Losing Proposition

Sponsored By REL

Topics:

Accounting > Profit & Loss

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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, the financial community’s inevitable kneejerk 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 with the need to do it. What is not obvious to those that do is the down side.

DETAILS

Sponsored by: REL

Released: February 14, 2008

Length: 7 pages

Format: PDF (595 kb)

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