The company also tweaks its sales projections, stating them as significantly higher than they probably are in reality. To this end, Company ABC window dresses by suddenly “acquiring” and holding substantial cash to make their company look more liquid – easily able to make loan payments, hand out dividends, or use their substantial cash flow to invest in expanding the business. It is looking to make the company appear as attractive as possible to draw in new shareholders and investors. To get a clear picture of what window dressing may look like, consider the following example:Ĭompany ABC is in the process of generating its financial reports for the end of the reporting period. This is because it can – and sometimes does – involve making unethical or even illegal changes to numbers, charts, timelines, orders, etc., to make the financial picture of a company look the most appealing to outsiders. Window dressing comes with at least a slightly negative connotation. The downside to window dressing is that, on the whole, it’s looked at with skepticism. It is what attracts new business opportunities, investors, and even consumers. In finance, window dressing refers to the efforts taken to make the financial statements of a business look better before they are publicly released.įor a company, window dressing is important because every business wants its financial information to look as appealing as possible. However, when it is referenced by the finance world, the term means something slightly different. “Window dressing” is commonly used to refer to the way a pedestrian facing the window of a retail business is presented to make their goods look most appealing.
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