Page 19 - How Not To Cook The Books Article

Gearing

Diagram 5

Watch for high debt

A company with too high debt is walking on the edge of a cliff. Any major

problem, and they get pushed over. Moreover, 1-to-1 may not be
enough if you're dealing with a type of business that depends heavily on
short-term debt. In the case of Wrekin 1 to 1 is not the problem. The
problem is the swing from -441 to +479 (See Diagram 5). This is so
unique it demands investigation one that the auditors did not do. A result

of which is reflected in the shareholder funds (See Diagram 6) and the
ability of the company to raise loans.