🕯️ [INT. FINACADEMICS OFFICE – NIGHT]
A storm brews outside. Inside, Sherlock Holmes and Dr. Watson sit beneath the flicker of gaslight. Stacks of financial statements lie open, as ominous as unopened telegrams. Holmes peers through a magnifying glass at a suspiciously upbeat revenue report.
WATSON:
You look troubled, Holmes. The numbers seem as cheerful as a banker on bonus day.
HOLMES:
Precisely, Watson. Too cheerful. Observe—revenues up 30% year over year. But inventory remains as static as a marble statue, and receivables are puffed up like a Mayfair peacock at parade.
| Metric | 2022 | 2023 | Change | Interpretation |
|---|---|---|---|---|
| Revenue | $100M | $130M | +30% | Strong growth, but… |
| Accounts Receivable | $20M | $29M | +45% | High receivables = unpaid sales |
| Inventory | $10M | $10.5M | +5% | Inventory not moving as fast |
| Cash Flow from Operations | $15M | $13.5M | -10% | Cash not keeping up with sales |
| DSO (Days) | 60 | 75 | +25% | Customers delaying payment |
| Inventory Turnover | 6x | 5.8x | -3% | Stable but not matching sales |
WATSON:
Could it be… phantom revenue?
HOLMES:
Bullseye. Some companies recognize revenue before it’s as real as a five-pound note. These “sales” might be as tangible as my good looks—utterly imaginary.
WATSON:
You mean… booked on products not shipped, or without a single customer confirmed?
HOLMES:
Exactly. Or worse—channel stuffing: pushing products onto distributors like they’re hotcakes, then booking the shipment as sales. It’s a trick Enron played, and Sunbeam before that. “Bill and hold,” they called it—though I’d say more “bill and bluff.”
WATSON:
Diabolical. But how do we catch such ghostly gains?
HOLMES:
We follow the cash, Watson. Real sales bring real money. If revenue soars but cash flow limps behind like a lame hound—something’s afoot.
WATSON:
And the rising receivables tell us—customers aren’t paying. Possibly because they don’t exist.
HOLMES:
Precisely. When metrics don’t move in unison, the truth is usually lagging behind in handcuffs. But we’ve caught it red-handed tonight.
WATSON:
Case closed. Tea?
HOLMES:
Only if it’s steeped longer than their cash collection cycle, dear Watson.
🧠 Detective’s Note: The SEC cracked down on many phantom revenue cases, including Sunbeam (1998), where “channel stuffing” inflated revenues by shipping unordered goods.
Watch for rising revenue, stagnant cash, and bloated receivables — the hallmarks of fiction dressed as finance.
“It is a capital mistake to theorize before one has data.”
– Sherlock Holmes, A Scandal in Bohemia