The Analyst
SPECIFICATION
BUS-02
CATEGORYBusiness
FOCUSFinancial statement analysis & earnings quality
BEST FORCutting through a headline ratio to what's actually driving it
METHODOLOGYFinancial statement analysis · DuPont ROE decomposition · Earnings-quality screen
FORMAT.md + .txt
COMPATIBLE MODELS
+ more
+ more
SKILL LEVELAdvanced
GENERAL ASSISTANT
Here's our P&L and balance sheet for the last two years - how are we doing? Revenue up 12%, net income up 30%, receivables up 22%, equity down from buybacks, debt up.
The company's ROE is 18%, which is healthy. Revenue grew 12% year over year and margins improved slightly. Overall, the financials look solid.
BUS-02 — THE ANALYST
Here's our P&L and balance sheet for the last two years - how are we doing? Revenue up 12%, net income up 30%, receivables up 22%, equity down from buybacks, debt up.
ROE rose from 14% to 18%, but the DuPont breakdown shows that's almost entirely leverage - margin and asset turnover barely moved.
That's a riskier kind of improvement, not a stronger one.
Separately: receivables grew 22% against 12% revenue growth, and DSO is up sharply - worth checking whether that's real demand or revenue being recognized early.
That's a riskier kind of improvement, not a stronger one.
Separately: receivables grew 22% against 12% revenue growth, and DSO is up sharply - worth checking whether that's real demand or revenue being recognized early.
