Every blow up avoided improves the performance of your portfolio.
Management faces crushing pressure to make things appear better than they are.
Management tortures the numbers to "beat by a penny" and to keep the Wall St analyst predators and their dreaded downgrades at bay.
Aggressive accounting may not be illegal, but its chicanery. Sooner or later, hard and long aggressive accounting can try to entomb the bodies, they rise like zombies, until the company misses huge and the zombies suck management brains and investor profits through stock downgrades and selling.
The job is to analyze earnings quality.
The book may place revenue recognition and inventory management next, but every part of the financials connects with another. "Earnings" is the financial picture as a whole.
Rising days sales outstanding or days sales in inventory may be the two great single indicators of trouble in the next quarter or several.
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