3 ideas
When accounts receivable grow faster than revenue, the company is booking sales it has not collected in cash, often by loosening credit terms or stuffing distribution channels to pull future demand into the current period. The divergence shows up on the balance sheet before it hits the income statement.
Inventories rising faster than sales mean either demand is weakening or management is overproducing to spread fixed costs across more units, which flatters gross margin now. Either way, the excess stock must later be discounted or written down. The margin that looks healthy today is a deferred loss waiting to be recognized.
Companies keep two sets of legitimate books: one for shareholders, where they want income to look high, and one for tax authorities, where they want it to look low. When reported pretax income grows while taxable income stagnates or falls, the gap is usually filled by aggressive choices such as longer depreciation lives, accounting changes, or early revenue recognition.