Business Finance Homework Help

Business Finance Homework Help. detect managed earnings when reviewing the firm’s balance sheet, income statement, and cash-flow statement

In today’s business environment where publicly traded companies feel pressure to meet short-term earnings expectations, management may be tempted to “manage earnings”. Assess how a financial statement user may be able to detect managed earnings when reviewing the firm’s balance sheet, income statement, and cash-flow statement. Indicate how a potential investor might interpret these “red-flags”. Provide support for your rationale.
Assess how the Sarbanes-Oxley Act addresses the concern of corporate “managed earnings”, indicating whether or not you believe the requirements within the Act are sufficient to minimize these concerns. Provide support for your rationale