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An investor wants to know if a company is manipulating its earnings with the help of allowances for doubtful accounts? What is the best way
An investor wants to know if a company is manipulating its earnings with the help of allowances for doubtful accounts? What is the best way to do this?
Look at the level of doubtful accounts as a percentage of sales and percentage of receivables for past years.
Compare the level of doubtful accounts as a percentage of sales and percentage of receivables with peers in the same industry.
Analyze the earnings trends without allowances for doubtful allowances and identify earnings pressures if any.
All of these.
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