Six red flags that could have saved you from the BT Profit Warning

Nearly £7 billion of value was wiped out today in BT, formerly British Telecom, after the phone giant revealed that an accounting scandal at its Italian subsidiary was much bigger than first thought. For around 1 million individual shareholders, this sort of massive collapse at a FTSE 100 blue chip is very rare, and very bad news. We’ve taken a look at the Stockopedia StockReport, a page that’s packed full of algorithmic insights into the company’s finances – to see if these problems could have been anticipated.This one page online summary of the company gives every investor the insights they need to avoid these kinds of large cap catastrophes.  Let’s take a closer look and learn to read some of the signs:1 – A High Earnings Manipulation Risk While BT’s shares have been tumbling for some time, today’s enormous 20% mark down was triggered by the escalation of an accounting scandal at their Italian subsidiary. Auditors KPMG uncovered a serious overstatement of earnings in its Italian subsidiary over a number of years. “These investigations have revealed that the extent and complexity of inappropriate behaviour in the Italian business were far greater than previously identified and have revealed improper…