 Definition of Window dressing - Finance dictionary
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Window dressing (See Chapter 19 of the Vernimmen)
The practice of massaging EPS is called "window dressing", or improving the look of the accounts by adjusting exceptional items, provisions, etc. Since the date of closing the yearly accounts is totally arbitrary, a firm can delay or hasten the accounting records of some expenses or revenues, to affect profits. It is obvious that the profit is only moved in time, and is in no case changed. The expenses and revenues recorded in advance also constitute a source of adjustment: a more or less restrictive recognition has direct consequences on yearly profits. In the same way the company can unload some of its debts between December 30 and January 2 to show a lower indebtedness.
Window dressing (See Chapter 19 of the Vernimmen)
The practice of massaging EPS is called "window dressing", or improving the look of the accounts by adjusting exceptional items, provisions, etc. Since the date of closing the yearly accounts is totally arbitrary, a firm can delay or hasten the accounting records of some expenses or revenues, to affect profits. It is obvious that the profit is only moved in time, and is in no case changed. The expenses and revenues recorded in advance also constitute a source of adjustment: a more or less restrictive recognition has direct consequences on yearly profits. In the same way the company can unload some of its debts between December 30 and January 2 to show a lower indebtedness.
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Definitions of terms begining
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Window dressing (See Chapter 19 of the Vernimmen)
The practice of massaging EPS is called "window dressing", or improving the look of the accounts by adjusting exceptional items, provisions, etc. Since the date of closing the yearly accounts is totally arbitrary, a firm can delay or hasten the accounting records of some expenses or revenues, to affect profits. It is obvious that the profit is only moved in time, and is in no case changed. The expenses and revenues recorded in advance also constitute a source of adjustment: a more or less restrictive recognition has direct consequences on yearly profits. In the same way the company can unload some of its debts between December 30 and January 2 to show a lower indebtedness.
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