Today's word: BIG BATH
Theme for this fortnight: ACCOUNTING
The
process of manipulating
a company's earnings to make them appear worse than
they truly are. Losses are expanded so that the company can
mislead investors and shareholders. Big
bath accounting reduces the amount of assets held by
the company so that future quarterly performance will
appear better than it truly is. This type of procedure is typically used during
a bad year. For example, a company may elevate sales declines to
a level that will help future losses appear minimal.
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