Spotting trouble in the accounts

You do not need to be an accountant to notice most of these. They are patterns, not calculations.

1. 1Profit rising while operating cash flow falls. The most reliable single warning there is.
2. 2Receivables growing faster than revenue. Sales are being booked but not collected.
3. 3Repeated one-off items. Something that happens every year is not exceptional.
4. 4A change of auditor without a clear explanation.
5. 5Results published late, repeatedly.
6. 6Rapid growth in a business that cannot plausibly grow that fast.