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An idea that delivers

HISTORICAL FINANCIAL ANALYSIS


CA RAJIV SINGH
FCA, CISA(USA), LIFA(USA), LIII.
Co-Founder Explico Consulting

Explico Consulting is pioneer of world


class valuation practices in India

LEARNING GOALS

Aggressive accounting, Earning management, Income smoothing, fraudulent financial


reporting, creative accounting, Financial shenanigan

Business analysis, Strategy analysis, Accounting analysis, Financial analysis

HFA- Why?

HFA- How?

HFA- Length of Financial History

HFA -Fraud and Red Flags

LEARNING GOALS


AGGRESSIVE ACCOUNTING
A forceful and intentional choice and application of accounting principles done in an
effort to achieve desired results, typically higher current earnings, whether the
practices followed are in accordance with GAAP or not

EARNINGS MANAGEMENT

The active manipulation of earnings toward a predetermined target, which may be set by
management, a forecast made by analysts, or an amount that is consistent with a
smoother, more sustainable earnings stream

LEARNING GOALS


INCOME SMOOTHING

A form of earnings management designed to remove peaks and valleys from a normal
earnings series, including steps to reduce and store profits during good years for
use during slower years.

FRAUDULENT FINANCIAL REPORTING

Intentional misstatements or omissions of amounts or disclosures in financial statements, done


to deceive financial statement users, that are determined to be fraudulent by an
administrative, civil, or criminal proceeding

LEARNING GOALS

CREATIVE ACCOUNTING

Any and all steps used to play the financial numbers game, including the aggressive
choice and application of accounting principles, fraudulent financial reporting, and any
steps taken toward earnings management or income smoothing

FINANCIAL SHENANIGAN
Actions or omissions designed to hide or distort the real financial performance or
financial condition of a company

Dr. Howard Schilits Seven Shenanigans


1.

Recording revenue too soon

2.

Recording bogus revenue

3.

Boosting income with one-time gains

4.

Shifting current expenses to a later or earlier period

5.

Failing to disclose all liabilities

6.

Shifting current income to a later period

7.

Shifting future expenses into the current period

MOTIVES FOR CREATIVE ACCOUNTING


Share-price effects

 Higher share prices


 Reduced share-price volatility
 Increased corporate valuation
 Lower cost of equity capital
 Increased value of stock options

MOTIVES FOR CREATIVE ACCOUNTING


Borrowing cost effects
Improved credit quality
Higher debt rating
Lower borrowing costs
Less stringent financial covenants

Bonus plan effects


Increased profit-based bonuses

Political cost effects


Decreased regulations
Avoidance of higher taxes

Component Processes of
Business Analysis

Business
Environment &
Strategy Analysis
Industry
Analysis

Strategy
Analysis

Financial
Analysis

Accounting
Analysis

Profitability
Analysis

Analysis
of cash
flows

Risk
Analysis

Cost of Capital Estimate

Prospective
Analysis

Intrinsic Value

Business Analysis
Evaluate Prospects

Evaluate Risks
Business Decision Makers

Equity investors
Creditors
Managers
Merger and Acquisition Analysts
External Auditors
Directors
Regulators
Employees & Unions
Lawyers

Information Sources for Business Analysis


Quantitative

Financial Statements

Qualitative

Management discussion & Analysis(MDA)

Chairpersons Letter

Industry Statistics
Press Releases

Economic Indicators
Financial press

Regulatory filings
Vision/Mission Statement

Trade reports

Web sites

Credit Analysis

Equity Analysis

Management &
Control

Regulation

Financial
Management

Labour Negotiations
Types of
Business
Analysis

Director Oversight

External Auditing
Mergers, Acquisitions
& Divestitures

CREDIT ANALYSIS

Non-trade
Creditors

Trade Creditors

Provide goods
or services

Bear risk of
default

Provide major
financing

Bear risk of
default

Most shortterm

Usually implicit
interest

Most longterm

Usually explicit
interest

CREDIT ANALYSIS

Credit worthiness: Ability to honor credit obligations


(downside risk)
Liquidity
Ability to meet short-term
obligations
Focus:
Current cash flows
Make up of current
assets and liabilities
Liquidity of assets

Solvency
Ability to meet long-term
obligations
Focus:

Long-term profitability
Capital structure

EQUITY ANALYSIS

Assessment of downside risk and upside potential

Technical analysis /
Charting
Patterns in price or
volume history of a stock
Predict future price
movements

Fundamental Analysis
Determine Intrinsic value
without reference to price
Analyze and interpret key
factors
Economy
Industry
Company

ACCOUNTING ANALYSIS

Process to evaluate and adjust financial statements


to better reflect economic reality

Comparability problems across firms and across time


Manager estimation error
Distortion problems

Earnings management
Accounting Standards

Accounting
Risk

FINANCIAL ANALYSIS

Process to evaluate financial position and


performance using financial statements
Profitability analysis Evaluate return
on investments
Risk analysis Evaluate riskiness
& creditworthiness
Analysis of
cash flows

Evaluate source &


deployment of funds

Common tools

Ratio
analysis

Cash
flow
analysis

PROSPECTIVE ANALYSIS

Process to forecast future payoffs


Business Environment
& Strategy Analysis
Accounting Analysis

Financial Analysis

Value

Historical Financial Analysis- Why?

Helps in assessing true operating performance in past


Provides the base for future estimates- has done it before
indicates ability to do it in future
Helps in estimating risk, cost of capital and capitalization rate
Helps in estimating appropriate valuation multiples
Helps in assessing excess assets or assets deficiencies- how
much asset was needed to achieve sales target
Helps in assessing true liabilities

Historical Financial Analysis- How?

Unpeel the onion skin


Step- I
Normalizing

Step- II

HFA
Control
Adjustments

Segregating Operating
& Non- Operating
Assets

Comparative
Analysis

Commonsizing

Trend
Analysis

Ratio Analysis

Historical Financial Analysis- How?


Normalizing: Assessing Performance under Normal
Condition and GAAP so as to assess strengths and
weaknesses against peers
Normalization includes adjustment for

Unusual Items
Non recurring items
Discontinued segment
Extraordinary items
Prior period items
Changes in accounting policies

Non- compliance with GAAP


Restructuring charges

HISTORICAL FINANCIAL ANALYSIS- HOW?


Steps in Normalizations
 Evaluate Accounting strategies
 Review of Accounting policies and notes to the
accounts
 Assess quality and adequacy of disclosures
 Undo accounting distortions

Evaluate Accounting strategy

 Compare firms accounting policies with peers


 Assess linkages between management and
incentive to the management
 Evaluate change in accounting policies in the
past and its justification
 Evaluate conformity of accounting policies with
GAAP
 Assess chances of structuring entries to achieve
accounting objectives- like maintaining
consistence EBITDA or EBIT

Review of accounting policies and notes to the accounts for


identifying

 KSF and their management & Evaluation


 Adequacy of MTM, Inventory valuation,
allowances, provisions, write back, write off
policies
 Depreciation and amortization methods
 Assets impairment policies
 Treatment of intangibles
 Timing of recognition of revenues and expenses
 Trade loading or channel stuffing
 capitalizing v/s expenses decision
 Omission of contingent liabilities

Review of accounting policies and notes to the accounts for


identifying











Personal expenses
Related party transactions
Off- balance sheet transactions and entities
unrecorded liabilities
Segment disclosures
Discontinued operations
Gain or loss on sale of assets
DTA or DTL
Accounting for financial derivatives and convertibles
Assess accounting flexibility

Assess quality and adequacy of disclosures


 Does the firm provides adequate disclosure to assess
firms strategy and economic consequences?
 Does the firm comply with disclosure norms?
 Do the notes to accounts explain the assumptions
and logic?
 Does the firm provides additional disclosures to help
outsiders?
 How good is the investors relation program?
 How good is the management in providing bad or
good news?

DISCONTINUED OPERATIONS

For analysis of discontinued operations:


Adjust current and past income to remove effects of
discontinued operations
Adjust assets and liabilities to remove discontinued operations
Retain cumulative gain or loss from discontinued operations in
equity

ACCOUNTING CHANGES

Analyzing Accounting Changes


Are cosmetic and yield no cash flows
Can better reflect economic reality
Can reflect earnings management (or even
manipulation)
Impact comparative analysis (apples-to-apples)
Affect both economic and permanent income


For permanent income, use the new method and


ignore the cumulative effect

For economic income, evaluate the change to


assess whether it reflects reality

ANALYZING SPECIAL ITEMS

Income Statement Adjustments


Permanent income reflect profitability of a company
under normal circumstances
Most special charges constitute operating expenses
that need to be reflected in permanent income
Special charges often reflect either understatements
of past expenses or investments for future profitability
Economic income reflects the effects on equity of all
events that occur in the period
Entire amount of special charges is included

ANALYZING SPECIAL ITEMS

Earnings Management with Special Charges


Special charges often garner less investor
attention under an assumption they are non-recurring
and do not persist
Managers motivated to re-classify operating
charges as special one-time charges
 When analysts ignore such re-classified charges
it leads to low operating expense estimates and
overestimates of company value

RCOM 2008-09
Excess of Rs. 16,428.48 crore arising on such transfer of assets and liabilities, before making the
adjustments, in accordance with the Scheme, for cancellation of investments of Rs. 2,096.43
crore (including Equity Shares of Rs. 977.00 crore acquired on conversion of loan) in RGNL and
net effect on fair valuation of assets and liabilities of the Company identified by the Board as
prescribed to be fair valued, based on market approach/ depreciated replacement cost basis by
an independent valuer, for this purpose (Identified Assets) of Rs. 12,698.81 crore has been
credited to General Reserve, to be dealt with in accordance with the Scheme.

Had the Scheme not prescribed this treatment, Rs. 14,332.05 crore would have been credited to
Capital Reserve as required by the Purchase Method prescribed by Accounting Standard (AS)
14 on Accounting for Amalgamation and General Reserve would have been lower by Rs.
12,698.81 crore.

SOURCES OF ACCOUNTING DISTORTIONS

Accounting Standards attributed to


1)
political process of standard-setting,
2)
accounting principles and assumptions, and
3)
Conservatism
Estimation Errors attributed to estimation errors inherent in accrual
accounting
Reliability vs Relevance attributed to over-emphasis on reliability at
the loss of relevance
Earnings Management attributed to window-dressing of financial
statements by managers to achieve personal benefits

EARNINGS MANAGEMENT FREQUENT SOURCE OF


DISTORTION
Earning Management strategies:
o

Increasing Income managers adjust accruals to increase


reported income
Big Bath managers record huge write-offs in one period to
relieve other periods of expenses
Income Smoothing managers decrease or increase reported
income to reduce its volatility

EARNINGS MANAGEMENT
MOTIVATIONS
o

Contracting Incentives - managers adjust numbers used in


contracts that affect their wealth (e.g., compensation contracts)
Stock Prices managers adjust numbers to influence stock
prices for personal benefits (e.g., mergers, option or stock
offering)
Other Reasons - managers adjust numbers to impact
1) labour demands,
2) management changes, and
3) societal views

EARNINGS MANAGEMENT MECHANICS


o

Incoming Shifting:
Accelerate or delay recognition of revenues or
expenses to shift income from one period to another
Classificatory Earnings Management:
Selectively classify revenues Earnings and expenses in
certain parts Management of the income statement to
affect analysis inferences regarding the recurring nature
of these items

Comparative Analysis
With

Company Data
Over Time

Common Size
Statement

Industry Average

Trend Analysis or Time


Series Analysis

Ratio Analysis

- Assets Utilization Ratio

Balance Sheet: each item


% of Total Assets
Profit & Loss: each item
as a % of Sales

Benchmark
Companies

CAGR

- Performance Ratios
- Leverage Ratios
- Liquidity Ratio
- Altman Z- Factor

COMPARATIVE OR HORIZONTAL ANALYSIS

Yr1

Yr2

Yr3

Purpose: Evaluation of consecutive financial statements


Output:
Types:

Direction, speed, & extent of any trend(s)


Year-to-year Change Analysis
Index-Number Trend Analysis

COMMON-SIZE or VERTICAL ANALYSIS


Purpose :

Output:

Evaluation of internal makeup of financial


statements
Evaluation of financial statement accounts
across companies
Proportionate size of assets, liabilities, equity,
revenues, & expenses

IMPORTANCE OF RELATIVE FINANCIAL RATIOS

In order to make sense of a ratio, we must compare


it with some appropriate benchmark or benchmarks
Examine a firms performance relative to:

The aggregate economy


Its industry or industries
Its major competitors within the industry
Its own past performance (time-series analysis)

COMPARING TO THE AGGREGATE ECONOMY

Most firms are influenced by economic expansions and


contractions in the business cycle

Analysis helps to estimate the future performance of the


firm during subsequent business cycles

COMPARING TO THE INDUSTRY NORMS

Most popular comparison


Industries affect the firms within them differently, but the
relationship is always significant
The industry effect is strongest for industries with
homogenous products
Can also examine the industrys performance relative to
aggregate economic activity

COMPARING TO THE FIRMS MAJOR COMPETITORS

Industry averages may not be representative


A firm may operate in several distinct industries
Several approaches:
Select a subset of competitors for the comparison group
Construct a composite industry average from the different
industries in which the firm operates

COMPARING TO THE FIRMS OWN PAST


PERFORMANCE
Determine whether it is progressing or declining
Helpful for estimating future performance
Consider trends as well as averages over time

SIX CATEGORIES OF FINANCIAL RATIOS


1.

Common size statements

2.

Internal liquidity (solvency)

3.

Operating performance

4.

5.

Operating efficiency

Operating profitability

Risk analysis

Business risk

Financial risk

External liquidity risk

Growth analysis

OPERATING PROFITABILITY RATIOS

The DuPont System divides ROE into several ratios that


collectively equal ROE while individually providing insight

Net Income Net Income Net Sales


ROE =
=

Equity
Net Sales
Equity
Sales
Sales
Total Assets
=

Equity Total Assets


Equity

OPERATING PROFITABILITY RATIOS

Net Income
=
Common Equity
Net Income
Sales
Total Assets
=

Sales
Total Assets Common Equity

Profit
Margin

Total Asset
x Turnover

Financial
xLeverage

OPERATING PROFITABILITY RATIOS

An extended DuPont System provides additional


insights into the effect of financial leverage on the
firm and pinpoints the effect of income taxes on ROE
We begin with the operating profit margin (EBIT
divided by sales) and introduce additional ratios to
derive an ROE value

OPERATING PROFITABILITY RATIOS

EBIT
Sales
EBIT

=
Sales Total Assets Total Assets

This is the operating profit return on total


assets. To consider the negative effects of
financial leverage, we examine the effect of
interest expense as a percentage of total
assets

OPERATING PROFITABILITY RATIOS

EBIT
Sales
EBIT

=
Sales Total Assets Total Assets
EBIT
Interest Expense Net Before Tax

=
Total Assets
Total Assets
Total Assets

OPERATING PROFITABILITY RATIOS

EBIT
Sales
EBIT

=
Sales Total Assets Total Assets
EBIT
Interest Expense Net Before Tax

=
Total Assets
Total Assets
Total Assets
Net Before Tax (NBT)
Total Assets
Net Before Tax (NBT)

=
Total Assets
Common Equity
Common Equity
This indicates the pretax return on equity. To arrive at ROE
we must consider the tax rate effect.

OPERATING PROFITABILITY RATIOS

EBIT
Sales
EBIT

=
Sales Total Assets Total Assets
EBIT
Interest Expense Net Before Tax

=
Total Assets
Total Assets
Total Assets
Net Before Tax (NBT)
Total Assets
Net Before Tax (NBT)

=
Total Assets
Common Equity
Common Equity
Net Before Tax
Income Taxes
Net Income
100%
=
Common Equity
Net Before Tax Common Equity

OPERATING PROFITABILITY RATIOS

In summary, we have the following five components of return on


equity (ROE):

1.
2.
3.
4.
5.

Operating profit margin


Total asset turnover
Interest expense rate
Financial leverage multiplier
Tax retention rate

RISK ANALYSIS

Risk analysis examines the uncertainty of income for


the firm and for an investor
Total firm risks can be decomposed into two basic
sources:
Business risk: The uncertainty in a firms operating income,
highly influenced by industry factors
Financial risk: The added uncertainty in a firms net income
resulting from a firms financing decisions (primarily
through employing leverage).

External liquidity analysis considers another aspect


of risk from an investors perspective

BUSINESS RISK

Variability of the firms operating income over time


Can be measured by calculating the standard deviation
of operating income over time or the coefficient of
variation
In addition to measuring business risk, we want to
explain its determining factors.

BUSINESS RISK
Two primary determinants of business risk
Sales variability
The main determinant of earnings variability
Cost Variability and Operating leverage
Production has fixed and variable costs
Greater fixed production costs cause greater profit
volatility with changes in sales
Fixed costs represent operating leverage
Greater operating leverage is good when sales are
high and increasing, but bad when sales fall

FINANCIAL RISK
Interest payments are deducted before we get to net income
These are fixed obligations
Similar to fixed production costs, these lead to larger earnings
during good times, and lower earnings during a business
decline
Fixed financing costs are called financial leverage
The use of debt financing increases financial risk and
possibility of default while increasing profitability when sales
are high

FINANCIAL RISK

Two sets of financial ratios help measure financial risk


Balance sheet ratios
Earnings or cash flow available to pay fixed financial
charges
Acceptable levels of financial risk depend on business
risk
A firm with considerable business risk should likely
avoid lots of debt financing

FINANCIAL RISK
Proportion of debt (balance sheet) ratios
Long-term debt can be related to:
Equity (LTD/Equity)
How much debt does the firm employ in relation to
its use of equity?
Total Capital [LTD/(LTD +Equity)]
How much debt does the firm employ in relation to
all long-term sources of funds?
Total debt can be related to:
Total Capital [Total Debt/(TLNIBL)]
Assessment of overall debt load, including shortterm

FINANCIAL RISK

Earnings or Cash Flow Ratios


Relate operating income (EBIT) to fixed payments
required from debt obligations
Higher ratio means lower risk

FINANCIAL RISK
Interest Coverage or Times Interest Earned Ratio
Measures the number of times Interest payments are
covered by EBIT
Interest Coverage = EBIT/Interest Expense
May also want to calculated coverage ratios that reflect
other fixed charges
Lease obligations (Fixed charge coverage)

FINANCIAL RISK

Cash flow ratios


Fixed financing costs such as interest payments must be
paid in cash, so these ratios use cash flow rather than EBIT
to assess the ability to meet these obligations
Relate the flow of cash available from operations to:
Interest expense
Total fixed charges
The face value of outstanding debt

EXTERNAL LIQUIDITY RISK

Market Liquidity is the ability to buy or sell an asset quickly with little
price change from a prior transaction assuming no new information

External market liquidity is a source of risk to investors

EXTERNAL LIQUIDITY RISK


The most important factor of external market liquidity is
the value of shares traded
This can be estimated from the total market value of
outstanding securities
It will be affected by the number of security owners
Numerous buyers and sellers provide liquidity

Analysis of Growth Potential

Want to determine sustainable growth potential


Important to both creditors and owners
Creditors interested in ability to pay future
obligations
For owners, the value of a firm depends on its
future growth in earnings, cash flow, and dividends

DETERMINANTS OF GROWTH

Sustainable Growth Model


Suggests that the sustainable growth rate is a function of two
variables:
What is the rate of return on equity (which gives the maximum possible
growth)?
How much of that growth is put to work through earnings retention (rather
than being paid out in dividends)?

g = ROE x Retention rate


The retention rate is one minus the firms dividend payout ratio
Anything that impacts ROE would also be a determinant of future growth

DETERMINANTS OF GROWTH

ROE is a function of
Net profit margin
Total asset turnover
Financial leverage (total assets/equity)

CONTINGENCIES AND COMMITMENTS


Analyzing Contingencies
Sources of useful information:
Notes, MD&A, and Deferred Tax Disclosures
Useful analyses:
Scrutinize management estimates , BOARD minutes, communication with tax
department and other regulatory bodies
Analyze notes regarding contingencies, including description of contingency and its
degree of risk ,amount at risk and how treated in assessing risk exposure charges, if any,
against income
Recognize a bias to not record or underestimate contingent liabilities

CONTINGENCIES AND COMMITMENTS

BASICS OF COMMITMENTS
Commitments -- potential claims against a companys resources due to future
performance under contract

Analyzing Commitments
Sources of useful information:
Notes and MD&A and regulatory Filings
Useful analyses:
Scrutinize management communications and press releases
Analyze notes regarding commitments, including
Description of commitment and its degree of risk
Amount at risk and how treated in assessing risk exposure
Contractual conditions and timing
Recognize a bias to not disclose commitments
Review regulatory filings for details of commitments

OFF-BALANCE-SHEET FINANCING

Basics of Off-Balance-Sheet Financing


Off-Balance-Sheet Financing is the non-recording of financing obligations
Motivation
To keep debt off the balance sheet
Transactions sometimes used as off-balance-sheet financing:
Operating leases that are indistinguishable from capital leases
Through-put agreements, where a company agrees to run
goods through a processing facility
Take-or-pay arrangements, where a company guarantees to pay
for goods whether needed or not
Certain joint ventures and limited partnerships
Product financing arrangements, where a company sells and agrees to
repurchase inventory or guarantee a selling price
Sell receivables with recourse and record them as sales rather than liabilities
Sell receivables as backing for debt sold to the public

either
GAAP

ANALYZING RECEIVABLES
Assessment of earnings quality is often affected by an analysis of receivables and their
collectibility
Analysis must be alert to changes in the allowancecomputed relative to sales,
receivables, or industry and market conditions.
Two special analysis questions:
(1) Collection Risk
Review allowance for uncollectibles in light of industry conditions
Apply special tools for analyzing collectibility:
Determining competitors receivables as a percent of salesvis--vis the
company under analysis
Examining customer concentrationrisk increases when receivables are
concentrated in one or a few customers
Investigating the age pattern of receivablesoverdue and for how long
Determining portion of receivables that is a renewal of prior receivables
Analyzing adequacy of allowances for discounts, returns, and other credits
(2) Authenticity of Receivables
Review credit policy for changes
Review return policies for changes
Review any contingencies on receivables

REVENUE RECOGNITION

Analysis
Revenue is important for
 Company valuation
 Accounting-based contractual agreements
 Management pressure to achieve income expectations
 Management compensation linked to income
 Valuation of stock options
Analysis must assess whether revenue reflects business reality
 Assess risk of transactions
 Assess risk of collectibility
Circumstances fueling questions about revenue recognition include
 Sale of assets or operations not producing cash flows to fund interest
or dividends
 Existence of contingent liabilities

ANALYSIS OF CASH FLOWS


In evaluating sources and uses of cash, the analyst should
focus on questions like:
 Are asset replacements financed from internal or external funds?
 What are the financing sources of expansion and business
acquisitions?
 Is the company dependent on external financing?
 What are the companys investing demands and opportunities?
 What are the requirements and types of financing?
 Are managerial policies (such as dividends) highly sensitive to cash
flows?

ANALYSIS OF CASH FLOWS


Inferences from Analysis of Cash Flows
Inferences from analysis of cash flows include:

Where management committed its resources


Where it reduced investments
Where additional cash was derived from
Where claims against the company were reduced
Disposition of earnings and the investment of discretionary cash
flows
The size, composition, pattern, and stability of operating cash flows

ANALYSIS OF CASH FLOWS

Company and Economic Conditions


While both successful and unsuccessful companies can experience
problems with cash flows from operations, the reasons are markedly
different.
We must interpret changes in operating working capital items in light of
economic circumstances.
Inflationary conditions add to the
financial burdens of companies
and challenges for analysis.

DERIVATIVE SECURITIES

Analysis of Derivatives

Identify Objectives for Using Derivatives


Risk Exposure and Effectiveness of Hedging Strategies
Transaction Specific versus Companywide Risk Exposure
Inclusion in Operating or Non-Operating Income

Historical Financial Analysis - Length of


Financial History

Typically 5 years, if data are available


Idea is to cover sufficient years of data so as to
get signal from past about future
Earning Ability
Ignore insignificant year of operation

Historical Financial Analysis- Fraud and real


flags
Messaging the number Vs Cooking the books
HFA is unlikely to uncover fraud- it starts with the
assumption that figures are not misrepresented
HFA provides tools to reveal unusual patterns that are
difficult to rationalize- questions all red flags
Numbers simply dont make sense- not convinced
leave it.
Assets utilization ratios are the first one to give EWS
Unexplained changes are reasons for suspicious
Growth goals exceeds ability to finance

Historical Financial Analysis & Red flags


Unexplained changes in policies & estimates especially in
doom days
Unexplained transactions to boost profit
Very consistent margin, growth rate and stable or consistent
increasing cash and bank balance
Unusual increase in debtors and inventories in relation to sales
Unusual increase in intangible assets
Reduction in managed cost- like advertisement to boost cost
One time profit from non-operating assets
Unexplained focus or shift towards non-core business
Unusual RPT
Significant changes in segment revenue & margin

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