Financial Trends Paper Essay Example | Topics and Well Written Essays - 500 words

Financial Trends Paper - Essay ExampleAlso if we were to analyze the debt/equity ratios the decreasing leverage of the company has correspondingly increase not only its profitability but also increasing return on assets and increase in the net profit margin (money central, ten stratum summary).The article I am summarizing was published in Economist The ones that get away Accounts are increasingly more art than science. The author introduces the rivalry that although net profits of Amazon, online retailer, had fallen substantially while that of Sprint, telecom, had increased significantly share prices rose for both companies (Economist, 00130613). Author quotes Enron and WorldCom and stresses that people have become timid of profitability figures as these figures tend to be malleable (Economist, 00130613). There is a further argument that these errors start to creep in because companies are increasingly do use of estimates in their financial statements. The accrual method of expl anation where expenses and revenues are entered into accounts when incurred (Economist, 00130613) have made the issue difficult and to compound it fair value accounting practices have introduced their own difficulties.