– What did Lehman Bros used to manipulate its creditors?
– Lehman Bros have used repo105 to manipulate its creditors by manipulating their financial statement. The accounting method is known as repo105 has allowed Lehman Bros to briefly appear better in the eyes of their creditors, Investors and other involved parties, Those material transactions had the capability to change the decisions of discreet persons. Although Lehman Bros have failed to disclose these transactions in the records to their financial statements and in their filings to the sectors in the paperwork, An inspection is made of whether Repo105 transactions were appropriately noted and revealed in Lehman Bros financial statements and whether Lehman Bros executives behaved properly. To answer these questions, an examination is made of Mostly Accepted Accounting Standards, The Sarbanes Oxley Acts and the Institution of Managerial accounting standards. Our findings suggest that Lehman Bros acted unfairly. The Inclusion of our results is conferred and recommendations are made for upcoming researches.
– Key limitations for Financial Ratios.
– Manipulating in financial statements:
Ratio examination is based on information that is stated by the corporation in their financial statements, This information’s might be manipulated by the corporation managed to report a healthier outcome than its real performance, the ratio examination may not exactly reflects with the exact nature of the business, as the falsification of the information is not noticed by novice analysis, It is important that an analyst is alerted of these conceivable manipulations and continuously finishes, extensive due
to the diligence before accomplishing any deductions.
– Inflation effects:
Financial statements are unchained occasionally and thus, there are period changes between each release. If inflation has happened between the periods, then real values are not reflected in the financial statements, the numbers across several times are not similar until they are adjusted for inflation.
– past Information: Information that is used in the analysis is based on the actual past outcome that is freed by the company. Thus, ratio analysis, metrics don’t essentially represent future company performances’
– Periodic effects: An analyst must be aware of periodic factors that might possibly effect ratio analysis. The incapability to alter the ratio analysis to the periodic it effects may chief to wrong clarifications of the results from the analysis.
– Changes in accounting rules and policies:
If the corporation has changed its accounting rules and policies it may sharply affect the financial reporting, In that case, the main financial metrics applied in ratio analysis is changed and the financial outcomes noted after the alteration are not similar to the results noted prior to the changes. the analyst is the one to be up to date with changes to accounting rules and policies. Changes made are usually found in the records to the financial statements sector.