US companies' rush to boost year-end earnings by discounting products and delaying payments is counterproductive and leaves their balance sheets more than 20 per cent worse off in the ensuing three months, according to a study out today

The research, by the financial consultancy REL, found that in the last fiscal quarter of 2006, America's 1,000 largest companies boosted their working capital - a yardstick for short-term financial health measured by the difference between assets and liabilities - by $100bn. However, the gains were more than erased in the first three months of their fiscal 2007, with working capital decreasing by a combined $122bn. A similar trend was seen in 2004 and 2005.