In a prior post I discussed using the Altman Z-Score to predict business bankruptcy. Today, I highlight another analytical tool but this time we review one whose purpose is to help detect earnings manipulation. The Beneish M-Score The Beneish M-Score was developed in 1990s by Messod Beneish, then an Associate... Continue reading

In the summer of 2000 U.S. factories employed 17.3 million workers. Now, a little more than a decade later, over 5 million more manufacturing jobs have been lost, a disappearance that has devastated cities, towns and families across America. I was born in a GM town and had uncles and... Continue reading

Cost accounting has undergone evolutionary change in the last few decades. As globalization washed to American shores, increased competition and decreasing profit margins initially impacted the manufacturing industry. Forced to now search for sources of competitive advantage, manufacturers placed new emphasis on product costing to provide better information for pricing... Continue reading

The old adage that “cash is king” and you should “take money while you can” has been drilled into me for most of my career. This refrain served me well in raising public equity money in the 1980's, convertible debt in the 1990's, and VC and angel money in the... Continue reading

With World Cup fever gaining strength, I started thinking about the world’s largest companies and their leaders. If there was a World Cup of technology companies and we were in the final game of the tournament, who would be man of the match (soccer's version of MVP)? The top two... Continue reading

Cost of capital is an important factor in determining the value of a business. The market rewards a business that can raise money more cost effectively than its peers. Such a company is deemed to have a competitive advantage and hence a higher fair market value. But cost of capital... Continue reading

Like the waterfalls that cascade into Yosemite Valley, cash flows are the life source for a business. This becomes especially apparent when a business runs low on cash and is forced to prune people, product lines and expenses just to survive. The key to having cash flows that optimize the... Continue reading

Wikipedia makes the rather startling assertion that business value is an informal concept for which there is no consensus on its role in effective decision-making. I say startling, because surveys consistently show that there is a tidal wave of businesses that will change hands in the next few years. If... Continue reading

Not surprisingly, 2009 was a record year for bankruptcy filings in the U.S. According to the American Bankruptcy Institute, the number of businesses filing for bankruptcy here in Washington state increased from 477 in 2007 to 714 in 2008 and then to 1,158 in 2009. The Z-Score Fortunately, there is... Continue reading

As the old adage goes, fool me once shame on you, fool me twice shame on me. Today we explore how to avoid being fooled by fictitious financial statements so, according to the lyrics of The Who, we don't get fooled again. In the 2008 Report to the Nation fraud... Continue reading

Financial Statements Can Be a Work of Fiction Financial statements are supposed to tell the story of a business. But sometimes that story is a lie. Although financial statement fraud is the least common type of occupational fraud committed, it results in the highest average loss, averaging $2 million per... Continue reading

For Washington state businesses it has been the best of times and the worst of times. Our state regularly ranks near the top of the list in new job creation. Less commonly known, Washington is among the highest of states in numbers of business closings. According to a report by... Continue reading

More than ever, businesses, management teams and boards are under increasing stress to perform through a prolonged economic downturn. This current business climate is exposing weaknesses while removing resources. On this blog I will share useful information to help companies stabilize, grow and succeed from a CFO's perspective. We'll focus... Continue reading