Accruals are the non-cash net income earned by a business as a result of accrual-based accounting. Businesses with large positive accruals generally have large non-cash earnings, like sales on account that have not yet been paid by customers. Investors are wary of businesses that have large positive accruals over long periods of time. This flag identifies companies with high positive accruals, both in an absolute sense and also relative to rest of the universe.
High Accruals
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High Volatility
Volatility is used as a measure of a security's riskiness. Typically investors view a high volatility as high risk. This flag identifies companies with extreme volatile daily returns over the past year, both in an absolute sense and also relative to rest of the financial universe…
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…
Reduced Dividends
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…
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…