Question

Writing in Corporate Cashflow, Howard Schillit described how the market value of Comptronix fell from $238 million to $67 million in a few hours when it was revealed that management had “cooked the books.” Comptronix provided contract manufacturing services to makers of electronic equipment. Its 1991 financial results looked strong.
However the relationship between sales and accounts receivable sent signals to knowledgeable analysts.


1. Discuss the relationship that you would expect between sales and accounts receivable in a normal situation.
2. What unethical actions might cause sales to grow so much faster than accounts receivable? What unethical actions might cause the opposite, that is, for accounts receivable to grow faster than sales?
3. What is the most likely type of “cooking the books” that occurred at Comptronix?


$1.99
Sales0
Views72
Comments0
  • CreatedFebruary 20, 2015
  • Files Included
Post your question
5000