Investors generally buy shares in dividend-paying companies for the regular dividend payments. A cut or halt in dividend payments affects the cash inflows of these investors. Investors assume that a company is reducing dividends because it is having cash flow problems. This could be the result of deteriorating business conditions, such as declining sales, rising expenses and falling profits. This flag identifies companies where cash dividends (as a fraction of market capitalization) for the most recent fiscal year is significantly lower than same metric from the prior fiscal year, both in an absolute sense and also relative to rest of the universe.
Reduced Dividends
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Increased Borrowing
The debt to assets ratio is a leverage ratio used to determine how much debt (a sum of long term and current portion of debt) a company has on its balance sheet relative to total assets. All things being equal, a increasing debt to assets ratio is riskier for equity investors; debt holders often have seniority over company assets during bankruptcy. This flag identifies companies where Debt to Total Assets for the most recent fiscal year is significantly higher than same ratio from the prior fiscal year, both in an absolute sense and also relative to rest of the universe…
Deteriorating Profit Margin
Operating margin measures the proportion of revenue left over after paying the variable costs of production. Declining operating margins can point out significant weaknesses in company growth. This flag identifies companies where Operating Margin for the most recent fiscal year is significantly lower than same ratio from the prior fiscal year, both in an absolute sense and also relative to rest of the financial universe…
Share Dilution
Existing shareholders usually dislike share dilution because their ownership stake decreases without them trading any stock. This flag identifies companies where shares outstanding for the most recent fiscal year is significantly higher than that same metric from the prior fiscal year, both in an absolute sense and also relative to rest of the universe…
Low Cash Buffer
The Quick Ratio is used as a solvency metric to determine a firm's ability to pay down current liabilities with its cash, short term equivalents, and accounts receivables. For firms with low quick ratios (typically lower than 1) it may mean that the firm is potentially having solvency issues. This flag identifies companies where Quick Ratio for the trailing twelve months is low, both in an absolute sense and also relative to rest of the universe…