How every number is computed.

Detects hidden financial obligations not visible on the balance sheet. Examines operating lease commitments relative to total debt, Variable Interest Entity (VIE) and Special Purpose Entity (SPE) exposures, guarantees, and contingent consideration liabilities. Flagged when the lease-to-debt ratio exceeds 30%, indicating the company may have substantially more obligations than reported debt suggests.

Identifies companies carrying overstated acquisition values. Measures goodwill as a percentage of total assets and tracks recent impairment charges. Companies that grow through acquisitions can accumulate goodwill far exceeding the real value of what they purchased. Flagged when goodwill exceeds 15% of total assets.

Analyzes pension funding status and the assumptions companies use to minimize reported pension costs. Examines Projected Benefit Obligation (PBO) versus plan assets, funded status percentage, and expected return assumptions. Companies can mask pension underfunding through aggressive return assumptions. Flagged when funded status drops below 80%, return assumptions exceed 7%, or PBO exceeds 30% of total assets.

Detects signs that a company may be booking revenue prematurely or aggressively. Tracks Days Sales Outstanding (DSO) trends and the ratio of contract assets to contract liabilities. Rising DSO means the company is recognizing revenue faster than it collects cash, a classic early warning of earnings manipulation. Flagged when DSO exceeds 90 days or contract assets exceed twice contract liabilities.

Monitors whether the company is creating tax assets it may never realize. Examines deferred tax asset growth, valuation allowances, and uncertain tax positions. A rising valuation allowance signals that management itself doubts the recoverability of these assets. Flagged when the valuation allowance exceeds 25% of deferred tax assets.

Evaluates total lease exposure now that accounting standards require leases on the balance sheet. Analyzes operating versus finance lease liabilities, right-of-use assets, and total lease obligations relative to company size. Reveals hidden leverage that may not be immediately apparent from traditional debt metrics alone.

Examines the reliability of asset valuations on the balance sheet using the fair value hierarchy: Level 1 (market-quoted prices), Level 2 (observable inputs), and Level 3 (unobservable, management-estimated inputs). Level 3 assets are essentially marked-to-model, giving management discretion over valuations. Flagged when Level 3 assets exceed 10% of total fair value assets or unrealized gains exceed 50% of net income.

Tracks deterioration in operational efficiency through inventory turnover, receivables turnover, Days Payable Outstanding (DPO), and the Cash Conversion Cycle (DSO + Days Inventory Outstanding - DPO). A widening cash conversion cycle often precedes earnings disappointments and can indicate management is stretching payment terms or struggling to convert sales into cash.

Measures the gap between official GAAP earnings and the company's self-reported "adjusted" numbers. Companies routinely exclude stock-based compensation, restructuring charges, and acquisition costs to present rosier earnings. While some adjustments are legitimate, a persistent large gap may indicate the company is downplaying real costs. Flagged when non-GAAP adjustments exceed 30% of GAAP income.

Identifies transactions with insiders, affiliates, or entities connected to management. Tracks related party revenues, expenses, receivables, and payables as a percentage of total revenue. These transactions may not be conducted at arm's length and can obscure true operating performance. Flagged when related party activity exceeds 5% of revenue.

Monitors potential legal and environmental obligations that could materially impact the company. Examines litigation contingencies including loss accruals, settlements, and damages sought, environmental obligations such as remediation costs and asset retirement obligations, and warranty provisions across standard, extended, current, and noncurrent categories. Flagged when total contingent liabilities exceed 5% of total assets.

Assesses exposure from financial derivatives and hedging programs. Tracks derivative assets, liabilities, notional amounts, and hedge ineffectiveness charges. Large notional amounts can indicate significant risk exposure that is not transparent from the balance sheet alone. Flagged when notional value exceeds 50% of assets or net derivative positions exceed 10% of assets.

Evaluates whether acquisitions are creating or destroying shareholder value. Examines total acquisition cost, earnout and contingent consideration liabilities, integration costs, and the proportion of purchase price allocated to goodwill versus tangible assets. Flagged when acquisition spending exceeds 10% of total assets or when goodwill exceeds 80% of total acquisition cost.

Detects when companies capitalize costs that should be expensed, which artificially inflates both earnings and assets simultaneously. Examines capitalized software costs, the CapEx-to-depreciation ratio, and capitalized costs as a percentage of total assets. When CapEx significantly exceeds depreciation, it may indicate aggressive capitalization rather than genuine asset investment. Flagged when CapEx-to-depreciation exceeds 2x or capitalized software exceeds 5% of total assets.