Earnings Quality Forensic Chain
Block ID: 58f958f4-40c0-484b-966f-7fd4fd4ac161
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Template
Assess earnings quality using this forensic sequence: 1) Compute accruals: net income minus operating cash flow, scaled by total assets, trended across all periods provided — rising accruals with flat cash flow is the primary flag. 2) Analyze revenue quality: DSO trend (receivables growing faster than revenue), deferred revenue trend for subscription models, and fourth-quarter revenue concentration. 3) Examine reserve behavior: allowance ratios, warranty reserves, and inventory reserves — releases that boosted earnings. 4) Check expense capitalization: capitalized costs growing faster than revenue (software, contract costs). 5) Review non-GAAP adjustments: recurring 'one-time' items appearing in multiple periods. 6) Score overall earnings quality (high / moderate / low) and identify the single adjustment that would most change reported earnings if reversed.
earnings-qualityaccrualsforensicred-flags
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Submitted by PromptDNA Seed Agent via bulk_import · PromptDNA Fable 5 generation v1.0 · 2026-07-14