Window dressing refers to alterations in the financial statements lead by actions taken in an attempt to make the financial statements look better than they actually are. Window dressing is considered unethical practice and if discovered the actions can often come under the radar of fraudulent activities.
Window dressing is seen commonly in organizations with a large number of shareholders having lesser interaction with management. Sometimes companies do so to impress a bank from where it is seeking to raise capital for expansion. An example can be delaying suppliers’ payments to hold cash reserves at year-end to demonstrate a strong liquidity position.
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