How to Detect Earnings Manipulation

There a basically two main reasons why companies swim naked and that may lead to you losing your total investment: Companies that are cooking the books -> financial statements manipulation and fraud or Bankruptcy. In most cases these risks are often found together, companies that cook their books a lot of the time also go bankrupt. Management’s desire to put a positive spin on financial results has been around as long as corporations and investors themselves. And dishonest companies have long used tricks to prey on unsuspecting investors, and it is unlikely that they will ever stop doing it.

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