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What does it mean when a company is window dressing?

Window dressing refers to any attempt to manipulate financials to appear more favorable than the underlying business fundamentals would justify. An example of window dressing would be a company sending out a ton of invoices right before the end of financial reporting period, whether or not those invoices have any chance of getting paid.

You could also do something like delay scheduled payments on long-term liability to show a larger balance of cash or hide the fact that a company is currently operating in the red. They just temporarily don’t pay their bills, so they can build up the cash positive amount. That’s a little bit sketchy, like selling something to your own parent company and leasing it back to lower your reported liabilities.

Window dressing is would be anything that doesn’t reach the level of being illegal or fraudulent.

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