Earnings Quality Analyzer

## Earnings Quality Analyzer

**Stock**: {COMPANY} ({TICKER})
**Period**: {PERIOD}

---

**MODULE 1 — CASH CONVERSION**
| Metric                              | Value | Quality Signal |
|---|---|---|
| Net Income                          | $___M |                |
| Operating Cash Flow (CFO)           | $___M |                |
| CFO / Net Income ratio              | ___x  | >1.0 = good    |
| FCF / Net Income ratio              | ___x  | >0.8 = good    |

Interpretation: Is the company collecting its earnings as cash? ___

---

**MODULE 2 — ACCRUALS ANALYSIS**
- Accruals = Net Income – CFO
- Accruals: $___M
- Accruals / Average Total Assets: ___% (<5% = good, >10% = flag)
- Balance-sheet accruals (change in non-cash working capital / avg assets): ___%

Flag: Accruals trending up over 3 years? Yes / No

---

**MODULE 3 — REVENUE RECOGNITION FLAGS**
[ ] Days Sales Outstanding (DSO) growing faster than revenue (possible channel stuffing)
[ ] Deferred revenue declining relative to billings (possible pull-forward)
[ ] Revenue growth materially exceeds cash received from customers
[ ] Large proportion of revenue from related-party transactions
[ ] Frequent changes to revenue recognition policies

Flags found: ___ / 5

---

**MODULE 4 — NON-GAAP vs GAAP DIVERGENCE**
| Metric                    | GAAP    | Non-GAAP | Difference |
|---|---|---|---|
| EPS                       | $___    | $___     | $___       |
| Operating Income          | $___M   | $___M    | $___M      |
| EBITDA                    | $___M   | $___M    | $___M      |

- Are non-GAAP adjustments growing year over year? Yes / No
- Are the same items excluded repeatedly (suggesting recurring non-recurring items)? Yes / No
- Stock-based comp excluded? Yes / No (if yes, is it material? ___% of revenue)

---

**MODULE 5 — EARNINGS SMOOTHING CHECKS**
- Effective tax rate vs. statutory rate divergence: ___pts
- Pension/benefit assumption changes (discount rate, return assumptions): ___
- Restructuring charges in consecutive years: Yes / No
- Goodwill impairments history: ___

---

**EARNINGS QUALITY RATING**
| Module                   | Score (1–4) |
|---|---|
| Cash Conversion          |             |
| Accruals                 |             |
| Revenue Recognition      |             |
| Non-GAAP Divergence      |             |
| Earnings Smoothing       |             |
| **Total**                | **___ / 20**|

**Quality Rating**: High (17–20) / Medium (12–16) / Caution (8–11) / Red Flag (<8)