Read the small print: Earnings season tips for spotting red flags on financial statements

Companies must follow accounting rules to allow apples-to-apples comparisons, but there are still ways to make bad news look like good news.As the third-quarter earnings season ramps up, markets are paying close attention to corporate financial statements. Meeting or beating expectations can have a critical impact on a company’s stock and, in many cases, management bonuses.

“If there’s one adjustment, and it’s consistent and it has always been that way for five years, you build a bit of a comfort level with it and the market doesn’t seem to mind,” he says. “I believe management never looked so great as when a stock is doing well and never looked so poor as when a stock is not doing well,” she says.

“In an inflationary environment, it was important to see that companies could maintain revenue growth by pushing pricing through. When inflation is coming down, you want to make sure companies have unit growth coming through,” she says.

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