Be careful about the turning point of Shenzhen Stock Exchange's investment performance, and try to identify fraud.

Company A, the protagonist of the story, was listed on the A-share market in 2X1. The financial performance of Company A after listing is listed by year as follows:

From the table, we can see that Company A made a profit in the initial 2X1 years of listing. 2X2 years will result in a large loss. In the first three quarters of 2X3, Company A still suffered losses, but its income increased significantly in the fourth quarter, resulting in a small profit for the whole year of 2X3. Since then, although it has also achieved profits in 2X4, in 2X5 and 2X6, Company A has sustained large losses for two consecutive years. In 2X5, Company A also announced the start of a "snake swallow elephant" acquisition of a related industry company, and the share price of Company A increased exponentially in the same period.

at first glance, company a has made profits and losses in recent years, which is already a business situation worthy of vigilance. In 2X6, the CSRC issued a decision on administrative punishment to Company A, which finally unveiled the veil of financial fraud of Company A to the public. < P > What is the truth? Let's analyze this case according to the knowledge introduced in the previous series of articles.

1. Motivation of financial fraud

In the fourth quarter of 2X3, it is not difficult for interested investors to find the motivation and signal of profit fraud.

First of all, the performance of Company A changed in the second year after listing, and the loss amount greatly exceeded the profit of the previous year. If Company A continues to lose money in 2X3, it will be warned of delisting risk in 2X3 (hereinafter referred to as "*ST"). Surrounded by these objective factors, Company A has a strong motivation to turn losses into profits in 2X3.

Secondly, the rhythm of turning losses into profits of Company A is quite abrupt. In the case of continuous losses in the first three quarters from 2X2 to 2X3, it suddenly turned losses into profits in the fourth quarter of the year, which in itself deserves investors' attention and consideration.

Second, the way of financial fraud

Smell the motive, and then let's uncover the true face of fraud.

In order not to be warned of delisting risk, in this case, Company A took two ways to surprise profits in the fourth quarter of 2X3:

1. Misrecording the expense period

This fraud means that the expenses are artificially moved to the next year, thus reducing the accrued expenses in the current period and achieving the effect of inflated profits.

you can see whether the proportion of income, cost and expense is reasonable by observing the report information such as balance sheet, income statement, supplementary information of income statement, salary payable to employees and salary of key management personnel.

Specifically, the semi-annual income and employee compensation amount data of Company A from 2X1 to 2X3 are listed as follows:

In the above figure, the income of Company A increased sharply in the second half of 2X3, but the employee compensation decreased reversely. If investors pay attention to the amount of employee compensation accrued and paid in each year of the company (in the notes to the financial statements), and combine the sales income (visible in the income statement) to make a horizontal comparison between the years, it is possible to find the clues of fraud in the delayed accounting of costs.

Sure enough, when the notes to the financial statements and the income statement are combined, it can be found that the year-end bonus of 2X3 issued by Company A in January of 2X4 is included in the expenses of 2X4. Therefore, the expenses that should be included in 2X3 years are reduced through the mismatch of the expense period.

2, inflated income

This fraudulent means is to increase income through various channels, which can be real transactions or false transactions, such as forging contracts, bills, etc., or inflating income through unreasonable accounting estimates.

during the period from December 2X3 to the end of the year, Company A temporarily attached a marketing policy with "ulterior motives" to the sales of some products, such as "If you are not satisfied before March 31, 2X4, you can get a full refund" and other terms. Even if there are such clauses, Company A still recognizes all the sales amount under this sales arrangement as the current sales income, which leads to Company A's early recognition of income in December of 2X3 and finally realizes "turning losses into profits" in the fourth quarter.

investors can observe the overall profit and loss status of financial statements, whether the income and cost are matched, and the gross profit margin level, etc., and analyze whether the company has the motivation to achieve profitability (such as being near the critical value, etc.).

in this case, the financial fraud is the recognition of abnormal income at the end of the year, which leads to a large fluctuation of quarterly income and profit.

The trend of quarterly operating income and quarterly net profit data of Company A from 2X1 to 2X3 is shown in the following figure:

From the perspective of income, the operating income of Company A kept relatively stable or slightly changed from the first quarter of 2X1 to the third quarter of 2X3, while the operating income increased significantly in the fourth quarter of 2X3, accounting for 4% of the annual operating income. From the perspective of net profit, the net profit was negative from the first quarter of 2X2 to the third quarter of 2X3, while the total net profit in the fourth quarter of 2X3 increased sharply, accounting for 5% of the whole year and making the company profitable for the whole year.

to sum up, it is not difficult for rational investors to find that the "excellent" performance of operating income and net profit in the fourth quarter of 2X3 is worthy of vigilance in the absence of obvious seasonal fluctuations in business.

third, the "small secret" to identify financial fraud

secret 1: Be careful when the performance suddenly turns

First, when the invested enterprise loses money for the first time, it is advisable to find the reasons and trends of the loss through financial ratio analysis and reading relevant public information to judge the rationality of its financial statement performance. Second, when the performance suddenly appears "inflection point", we should carefully verify its commercial rationality, especially pay attention to whether there is a reverse signal in the company announcement and the performance of the same industry. Third, the unique products of the capital market, such as *ST and shell protection, may lead to the motivation of financial fraud of listed companies, so investors are advised to make careful decisions.

Tip 2: Pay attention to "being concerned by the regulatory authorities".

In p>2X4, Company A was investigated by the Securities and Futures Commission for improper trading of precious metals and was punished by the regulatory authorities. At the same time, when Company A was in the stage of merger and acquisition and transformation in 2X5, its share price fluctuated obviously, so it was paid special attention by the regulatory authorities.

investors who are interested in identifying the warning of regulatory risks can inquire about the regulatory letters and market dynamics received by the proposed investment company in recent years on the websites of regulatory agencies and major information publishing platforms.

column of supervision information disclosure of Shenzhen Stock Exchange: /disclosure/

Juchao Information Network: info.com.cn/

is the most authoritative and reliable way to know the recent situation of the company directly and quickly.

investors should be vigilant when investing in such companies and make appropriate investment decisions according to their own risk tolerance and preferences.