Please log in to bookmark this story. After seeing little activity for most of the day, PSG shares began to surge just after p. It was the same story in the United States, with the shares rallying Story continues below advertisement The price jump happened on heavy volume. From the market open at a.
Also found in: Wikipedia. Channel Stuffing An illegal practice in which a company willfully sells more of its product to distributors than the distributors can sell to customers.
The company makes these sales on credit , which temporarily boosts its accounts receivable and by extension its current assets.
This makes the company look healthier than it really is which can raise its stock price. Eventually, when the distributors are unable to sell the product they return it to the company instead of paying, which reduces the accounts receivable and brings the company's balance sheet in line with reality.
For example, an appliance manufacturer may inflate revenues and earnings in the current accounting period by shipping to retail stores more refrigerators, stoves, and dishwashers than the stores are likely to sell.
The practice of channel stuffing borrows revenues and earnings from the future because overstocked customers will reduce orders in future periods.
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