| Course | AC466 Fraud Detection and Financial Statement Analysis |
|---|---|
| Unit | Unit 10 |
| Paper type | Analytical findings memo |
| Length | About 760 words, 5 pages double-spaced |
| Format | APA 7 student paper |
| School | Purdue University Global |
| Program | BS in Accounting |
| Updated | October 2026 |
Free sample paper for AC466 Unit 10
Five Relationships That Stopped Holding: A Unit 10 Analytical Findings Memo on a Pool Equipment Maker
[Student Name]
Purdue University Global
AC466: Fraud Detection and Financial Statement Analysis
Unit 10 Analytical Findings Memo
[Instructor Name]
[Date]
Tidewell Pool Systems, the fund and every figure are composite; the textbook and articles cited are real.
Header
To: Research director, Harborline Growth Fund Cc: Portfolio manager From: Equity analyst Date: February 20, 2026 Subject: Tidewell Pool Systems, analytical findings on the 2025 annual report
Summary
The statements show a pattern consistent with revenue recognized ahead of collection: five relationships that held in 2023 had broken by 2025, all in the direction of earnings recorded before cash arrived. Nothing in the public record establishes that the accounting is improper, and each break has an innocent explanation that management can test with information only it holds.
Findings
Receivables against sales. Revenue grew 17.7 percent in 2025; receivables grew 47.8 percent. Receivable days rose from 60 to 90, against a peer median of 58 and a highest peer of 66. Innocent explanation: extended terms of up to 18 months offered to win early-buy orders in a competitive channel.
Gross margin against input costs. Margin rose from 34.0 to 36.0 percent over two years while management reported higher copper, resin and freight costs and the peer median fell to 31.4 percent. Innocent explanation: a shift toward higher-margin variable-speed pumps and controllers.
Operating cash against net income. Operating cash fell to $18 million while net income rose to $65 million, an accruals ratio of 7.4 percent of average assets against minus 3.8 percent two years earlier. Receivables and new distributor notes absorbed $55.5 million. Innocent explanation: working capital invested in growth that will convert to cash in 2026.
Deferred service revenue against unit shipments. Service plan deferrals dropped by $5.5 million, to $13.7 million, as units rose, after a revised standalone selling price moved an estimated $8.7 million into 2025. Innocent explanation: lower plan attachment, or a legitimate pricing update.
Fourth-quarter revenue against seasonality. The fourth quarter's share of revenue rose from 19 to 31 percent in a business whose customers' pools are closed in winter, and $41.2 million of revenue was recognized on units held in Tidewell's warehouses. Innocent explanation: an early-buy program that distributors genuinely asked to join.
Any one of these breaks would be a question; five breaking in the same year, all toward earnings ahead of cash, is a pattern, and a pattern is what an analyst outside the company can responsibly report without claiming to know the cause.
Corroboration and Its Limits
Beneish's M-score for 2025 is minus 1.70, up from minus 2.09, above the threshold at which firms resemble those later found to have manipulated earnings (Beneish, 1999). The score adds little beyond the receivables and accrual findings that drive it, and it misclassifies some honest growth companies. Accrual-heavy earnings have historically persisted less than cash-backed earnings (Sloan, 1996), which matters for valuation whatever the cause.
What the Five Findings Do Not Show
The public record cannot show whether any distributor has a side agreement allowing returns, whether held inventory is segregated, or whether the related-party distributor is part of the pattern. It also cannot show intent. The breaks could reflect an aggressive but honest push for share, financed by Tidewell's balance sheet, which would still be a business risk worth pricing: receivables on 18-month terms carry more credit risk than receivables on 60-day terms, whatever the accounting. For the fund, the practical conclusion is the same either way. Earnings quality has fallen, and the 2025 figure should not be capitalized as if it were backed by cash.
Questions for Management, Ranked
1. What share of 2025 revenue was sold on terms longer than 90 days, and what share of that has been collected?
2. How much of the $41.2 million of bill-and-hold product had shipped by the report date?
3. Was any held product redirected to other customers?
4. Which customers hold the $12.0 million of noncurrent notes, and at what interest?
5. What claims data support the cut in the warranty rate?
6. Why did the allowance fall as terms lengthened?
7. What drove the standalone selling price revision?
8. What were service plan attachment rates in 2024 and 2025?
9. Did the related-party distributor receive extended terms or hold inventory?
10. How much of gross margin improvement came from price, mix and cost?
11. What fourth-quarter shipments are expected in 2026?
The first three go to the heart of the pattern and should be asked first (Penman, 2013).
References
Beneish, M. D. (1999). The detection of earnings manipulation. Financial Analysts Journal, 55(5), 24-36. https://doi.org/10.2469/faj.v55.n5.2296
Penman, S. H. (2013). Financial statement analysis and security valuation (5th ed.). McGraw Hill.
Sloan, R. G. (1996). Do stock prices fully reflect information in accruals and cash flows about future earnings? The Accounting Review, 71(3), 289-315.
What the AC466 Unit 10 assignment asks for
The final AC466 unit asks for a memo to an investor reporting the results of your analysis. Address it to a specific reader and open with a two-sentence conclusion that states the pattern and the limit of what public information can establish. Present each broken relationship with its evidence, drawn from earlier units, and its innocent explanation. Report any screening score as corroboration with its limits, not as proof. Then say what the evidence leaves unknown, and what it means for the reader whatever the cause turns out to be. Close with ranked questions for management, starting with those that would most quickly confirm or dispel the pattern. Keep the language descriptive rather than accusatory throughout. Credit Beneish, Sloan and Penman in APA 7.
How this AC466 Unit 10 example is built
The sample's header addresses the research director of a composite fund. The summary describes a pattern consistent with revenue ahead of collection that public records cannot establish. Five findings follow: receivables against sales, margin against inputs, cash against income with $55.5 million absorbed, service deferrals against shipments, and fourth-quarter concentration with $41.2 million of bill-and-hold revenue, each with an innocent explanation. The highlighted sentence explains why a pattern can be reported responsibly. The M-score of minus 1.70 is reported with its limits, citing Beneish and Sloan. A section on the limits of public evidence concludes that earnings quality has fallen either way. Eleven ranked questions close the memo, with the first three marked as priorities, citing Penman.
Where the points sit in the AC466 Unit 10 rubric
AC466 findings memos are graded on audience fit, accurate synthesis of earlier work and restraint. The opening should state the conclusion and its limits in a few sentences the reader can act on. Each finding must carry its evidence and an innocent explanation. Graders deduct for accusatory language, since the course works from outside the company. Screening scores should corroborate, not decide. Saying plainly what the evidence leaves open, and what it means for the fund either way, is what makes the memo useful. Ranked questions show judgment about what would resolve the pattern fastest. Consistency with figures from earlier units matters. The term's final grade also weighs memo format and APA 7 citations.
Common AC466 Unit 10 mistakes, and how to avoid them
Many Unit 10 memos accuse the company of fraud, which public filings cannot establish. Others list ratios without saying which relationships broke or why it matters. Innocent explanations are missing. The M-score is presented as a verdict. The memo never says what the reader should do. Management questions come in no order. Numbers drift from what earlier units reported. A last common gap is a memo with no addressee or purpose. If your section analyzed a different company, our writers can turn your earlier units and its filings into the memo.
Get an AC466 Unit 10 example written to your instructions
Benchmark tables, the red flag review or the cash analysis from earlier units make the strongest base for a Unit 10 memo; add the company's statements, the prompt, the rubric and the memo's intended reader. Every break comes back beside its innocent explanation and the evidence that would decide it. The first custom memo is free and delivered in 24-48h. The paper above is an original model document written by our desk, not a submitted student paper and not an official Purdue University Global document.
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AC466 Unit 10 questions, answered
Why address the memo to a fund's research director?
Because the course works from outside the company, and an investor reading public filings is the natural audience for that work. Some sections name a different reader, such as a lender, an audit committee or a regulator, and the memo is readdressed accordingly. The reader changes the closing questions far more than it changes the findings.
How does the memo avoid accusing the company?
By stating what the relationships show and stopping there. Each break is described as inconsistent with what the operations would ordinarily produce, paired with the strongest innocent explanation, and linked to evidence that would decide between them. Intent is named explicitly as outside what public statements can reveal, which is the boundary this course grades most closely.
Can the memo draw on my earlier units?
Yes, and it reads better when it does. Send the work your section produced in earlier units, the company's filings, the prompt and the rubric. Findings are drawn from your own analysis where possible, the innocent explanations are argued at full strength, and the closing questions are written for the reader your prompt specifies.
Where can I find a free AC466 Unit 10 sample paper?
This page holds a complete AC466 Unit 10 analytical findings memo on a composite pool equipment maker, with five broken relationships, innocent explanations, a qualified M-score, ranked questions and APA 7 references.
What questions come first in the AC466 Unit 10 memo?
What share of 2025 revenue was sold on terms beyond 90 days and how much has been collected, how much bill-and-hold product had shipped by the report date, and whether any held product went to other customers.