📜 Introduction: Behind every line item lies a motive. This chapter of your training dissects goodwill games, lease maneuvers, and vanishing inventories. The scene of the crime? The financial statements.
🔎 Blurb: “The figures,” Holmes murmured, “are dressed too neatly. Someone has powdered the balance sheet and perfumed the income line.”
🎮 Game 11: The Goodwill Gambit
After an acquisition, goodwill makes up 60% of total assets. A curious case?
🔍 Investigate impairment testing
💥 No impairment recorded in 5 years — despite declining performance. Suspicious!
📈 Trust management’s valuation
😬 That’s what they want you to believe. Try again, Watson.
📊 Compare goodwill to peers
🧠 Excellent move. Their ratio is wildly out of sync.
🎮 Game 12: The Revenue Recognition Riddle
Revenue jumped 40% this quarter. But customer deliveries lag. What’s going on?
📦 Check deferred revenue
🔎 Almost none. They’re recognizing revenue before delivery. Red flag!
📄 Read the footnotes
💡 Brilliant. The new rev rec policy was quietly changed last quarter.
🎉 Celebrate the topline growth
🙈 You’ve been dazzled, not deductive.
🎮 Game 13: The Lease Labyrinth
Rent expense vanished from the income statement. Curious?
🏢 Review right-of-use assets
💼 They’ve capitalized operating leases — it’s now in depreciation and interest. Still an obligation!
📊 Compare EBITDA year-over-year
⚠️ EBITDA looks higher, but cash flow hasn’t improved. Lease distortion!
📈 Ignore it — GAAP changed
🧟 GAAP changed, but reality didn’t. Don’t be fooled.
🎮 Game 14: The Inventory Turn Trap
COGS is stable, but inventory days have doubled. Something smells stale…
📦 Check product categories
📉 Obsolete SKUs are piling up. Hidden write-offs pending.
📈 Trust efficiency claims
😬 The CFO’s “bulk buying” tale is flimsy. Try again.
🔍 Compare inventory to sales growth
💡 Bingo. Inventory growing faster than sales = manipulation possible.
🎮 Game 15: The Segment Shuffle
Company-wide profits are flat, but one division’s margin doubled overnight. Curious?
🧾 Read segment disclosures
🔎 Profit shifted from loss-making units to the star performer. Reclass alert!
📊 Check last quarter’s segment mix
🧠 Smart sleuthing. The mix changed subtly — for optics.
🎉 Congratulate the business unit head
😬 Hold your applause — this may be accounting theater.