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Cir ating trading is a fraudulent method that shows sales by turning sales in multiple companies.
In fact, there are cases where sales increased only on the book, even though the amount of money and product value has not increased.
For Investors
- 粉飾決算
- Aerial Growth
- Stock Price
It is an important risk that leads to.
What is circulating trading?
Comment
Cycle trading is a mechanism to turn sales and increase water.
For example:
- Company A to B
- B to C
- Company C to A
Like this, it is a form that the transaction will turn smoothly.
A → B → C → AIt looks like there is a deal in the look.
However, if the product value and economic value are not increasing as the actual situation, it is likely that the sales are displayed bigger than the actual situation.
Why?
The problem of circulating transactions is because sales increase more than actual situation.
つまり、
- No profit
- No need
- No more product value
- Cash is practically not included
, sales may be recorded on the financial results.
In order to assess the company by looking at the growth of sales, circulating transactions significantly distort investment decisions.
Basic image of circulation trading
Cir ating transactions can be described as follows:
Company A
↓
Buy B
↓
B sold to another company
↓
A companyIn fact, there is a possibility that there is no final demand for money or products.
In this case, only sales are large, and the growth of the company may be incorrect.
Why companies make circulating transactions?
The main reason is here.
| Reason | 内容 |
|---|---|
| Sales expansion | to grow |
| Stock Price | Indicates favor for investors |
| Lending | Make your bank rating better |
| NORMA | to business goals |
| Listing preparation | Strongly Show Growth |
Especially in companies with strong growth pressure, there is a risk of tilting fraudulent transactions to avoid sales.
Can circulating transactions be profitable?
Not always profitable.
In circulating transactions, costs may occur at the same time as sales.
However,
- Sales
- Growth rate
- ARR
- Number of companies
- Market Expectations
It may affect the stock price because it looks large.
In particular, in Gloss and SaaS companies, sales growth may be more important than profits, which greatly distorts market evaluation.
Why investor risk?
Reason 1. Growth may be a fake
Investors are usually
- Sales Growth
- Profit growth
- Increased number of customers
- Expansion of continuous billing
See and invest
However, in circulating transactions, these may appear better than the actual situation.
In other words, there is a risk that investors will pay high stock price for growth that does not actually exist.
What happens when you覚?
When a circulating transaction occurs, the company’s credit is greatly damaged.
Here is a typical impact.
| Impact | 内容 |
|---|---|
| Stock Price | Reliability |
| 決算訂正 | Cal past sales and profits |
| Third Party Committee | Unauthorized investigation |
| Listing Maintenance | Abolished listing risk |
| Cri Case | If it is malicious, it becomes an investigation target |
| Damage to shareholder value | You may proceed to the reduction or rehabilitation procedure |
The stock price is not much lower when it comes to powder settlement.
After that, there may be a long time to revise, audit, litigation, and credit.
It is difficult to see
It is not easy to pull out circulating transactions directly from external investors.
HOME
- The trade itself is
- There is a contract
- There is an
- The sales record can be seen in format
- via affiliated companies and agencies
It is because there is a case.
In other words, if you see only the format, you may see a normal trade.
The problem is whether there is a real demand in the transaction.
Points to be considered to investors
Don’t believe in sales
It is important here.
| ation | 内容 |
|---|---|
| Cash Flow | Is cash increased? |
| Payment | Isn’t it too big for sales? |
| Profit | Is it unnatural? |
| Reasons for rapid growth | Is the description specific? |
| Client Dependency | Is it biased to a specific company? |
| Sales | Is it possible to confirm actual demand? |
Especially important is the relationship between sales and cash.
Please be careful if sales cash flow is weak even though sales are increasing rapidly.
Relationship with Powder ion
Cir ating transactions may be a problem as a kind of powder ing.
Powder ion is to make financial statements fraudulently to show the actual situation of the company.
circulating trading
- More sales
- Growth
- Investor Error
- Impact on Financing
can lead to
That’s why circulating transactions are not just accounting mistakes, but a serious problem that breaks the corporate credit itself.
The concept for beginners
First,
More sales = Safety
It is important to understand that it is not.
In particular
- Fast growth
- Abnormally high PER
- Popular
- Strong symbols such as AI and SaaS
- Sold out
In the overlapping symbol, you need to look carefully.
The better the company, the more the sales growth and cash flow are linked.
On the other hand, it is safe to check the reason if only sales grow and cash is not included.
Common misunderstandings
| misunderstanding | In fact |
|---|---|
| Reliable with sales growth | Must be confirmed |
| Safety for Large Companies | There are cases of fraud even in large companies |
| Only profits should be seen | Cash confirmation is also important |
| Safe if you have a contract | If there is no actual demand |
| AI・SaaS | Consistent charges and actual usage |
- Cir ating trading is a way to turn sales and show big
- It may seem to grow more than the actual situation
- There is also a case that leads to powder settlement
- High stock price risk
- Investors want to check sales cash flow and receivables
- It is important not to make investment decisions only by sales growth
First of all, it is important to check whether profit and cash are matched.