The accounting trick used by companies to make a weak balance sheet look strong

In one recent case, a large investment sat comfortably under equity until the auditor read the shareholders' agreement, found a buyback clause, and delivered an adverse opinion – the harshest verdict in an auditor's vocabulary. In another, a company made no provision for a guarantee even after the lender sent a demand notice and dragged it into recovery proceedings. These are examples of managements hiding what they owe and making balance sheets look strong.

Raccontata daeconomictimes.indiatimes.com