Guides and documentation on financial data, portfolio management and AI analysis.
Notice and Project
Important notice about the Cifra project, available tools, how AI analysis works, and current development status.
Legal Notice & Transparency
Retail Investor Notice and Disclaimer
I am a retail investor: Cifra is a personal project developed independently for study, educational, and private research purposes. I am not a financial entity, securities firm, or registered financial advisor.
Calculations and formulas: The calculations and formulas used may not be correct or may vary from the methodologies applied by other analysts, tools, or institutions. All information, metrics, and accounting adjustments are presented according to our own criteria and should be considered for guidance only.
No recommendations or liability:I am not responsible for any recommendation or analysis that appears on the web or is produced by AI models. No data, summary, or calculation presented here constitutes a recommendation to buy, sell, or financial advice. Any investment decision you make is under your sole responsibility and risk; financial markets carry a real risk of capital loss.
Platform
What does Cifra offer?
Cifra provides you with specialized tools for tracking your investments and conducting fundamental research on U.S. companies:
Portfolio Tracking
Transaction log, weight calculation, diversification by asset, and net profitability control.
Price Alerts
Setting up automatic alerts to monitor quotes and receive notifications when key levels are reached.
Calendar
Estimated and confirmed dates for quarterly and annual results publication to plan monitoring.
Quarterly Reports
Direct access to official 10-Q and 10-K filings submitted by companies to the U.S. SEC.
U.S. Financial Data
Historical normalized income statements, balance sheets, and cash flow statements of U.S.-listed companies.
Artificial Intelligence10-Q · 10-K · SEC
Results Analysis with AI in Quarterly Reports
In the tab of Quarterly reports of each company you have the opportunity to deeply analyze official results with AI models.
Currently available sectors: You can analyze companies from defensive consumer, technology and software, consumer discretionary (retail, restaurants, housing, autos, and travel), energy, materials, industrials, health care (pharma, biotechnology, medical devices, health services, distribution and pharmacies, life sciences, and animal health), utilities (regulated electric, gas and water utilities and IPP/merchant), communication (telecommunications, cable and pay satellite, broadcasting, publishing and film/streaming/entertainment), real estate/REITs (listed equity REITs) and financial (banking, consumer finance, insurance —including managed care—, capital markets and payments, with a balance sheet lens or operating lens depending on the business). The AI tailors the rules to each business model: volume and pricing power in consumer, SBC and recurrence in software, backlog and OEM/aftermarket margins in industrials, commodity spreads in materials, R&D and product intangibles in health care, rate base, dividend and dilution in utilities, subscribers, content and advertising in communication, FFO/AFFO in REITs, and net interest income, provisions and regulatory capital in financials.
Expansion into new sectors: The expansion continues: the next steps are the utilities subsectors (power, gas, and water) and the communication subsectors (telecom, cable, media, and publishing) separately, the pending subsectors of the already supported sectors, and new countries, adjusting the prompts and the methodology to the operating reality of each industry.
Usage Limits and Shared Analyses
Daily Rate3 per day with an account · 1 free without signing up
Each registered user has up to 3 AI analyses per day to request new reports that have not been previously analyzed. Visitors without an account can run 1 free analysis per day (counted by IP); once used up, they are invited to sign up.
Shared AnalysisDoes not consume your daily quota
If another user has already analyzed a specific report, the next one who analyzes that same report it will not count at its limit of 3 per day, and will instantly return the same analysis that was done before.
Learning Library
Essential Guides: SEC Reports and Fundamental Analysis
Step-by-step monographic articles to learn to read official U.S. filings, calculate key metrics and interpret financial results:
Currently Cifra is in beta phase and absolutely everything is free: portfolio tracking, price alerts, the calendar, quarterly reports, financial data and AI analyses.
Maintaining the servers, SEC data processing, and AI API calls is entirely borne by an individual investor. Donations can be the difference between continuing with this project or not.
Any contribution directly helps cover server and API costs.
Financial Data
Reference guides on the three fundamental financial statements: income statement, balance sheet and cash flow statement.
Financial Statement · Performance
Income Statement
Income Statement · Statement of Profit and Loss (P&L)
The income statement it is the accounting report that summarizes the company's economic and commercial activity during a given period (a quarter or a full fiscal year). It reflects all revenue obtained from the sale of products or provision of services and successively deducts operating costs, depreciation, financial expenses and taxes until reaching net income.
What does it measure and how does it work?
Measures economic profitability under the accounting accrual basis: revenues and expenses are recognized at the time the commitment is made or the service is delivered, regardless of when the cash is physically collected or paid in the bank account.
Why does it matter to the investor?
It allows evaluating the organic growth of sales (top-line), pricing power through gross margin evolution, operating efficiency in management costs (operating margin), and the final earnings per share (EPS) that belongs to the shareholder.
Fundamental Analysis
The 9 Most Important Lines of the Income Statement
Key concepts, how to interpret them, and the golden rules to analyze them step by step:
01
Revenue (Revenue / Sales / Top-Line)
Starting Point
It is the total amount of money the company invoices for the sale of its products or the provision of its services before deducting any expense. It is the absolute starting point of the income statement (hence its name of top-line).
How to analyze it: Watch whether growth comes from selling more units (volume) or from raising prices (price/mix). A high-quality business is able to grow revenue by raising prices above inflation without losing customer share (pricing power).
02
Gross Profit (Gross Profit)
Base Operating Margin
It is the profit remaining after subtracting from revenue the Cost of Goods Sold (COGS), that is, only the costs directly attributable to the manufacture of the product or provision of the service (raw materials, packaging and containers, direct factory labor).
Gross Margin (Gross Margin = Gross Profit / Revenue): It is one of the best thermometers of competitive advantage (moat). High and stable gross margins year after year demonstrate that the company does not need to compete in a destructive price war.
03
R&D Expenses (Research & Development - R&D)
Investment in the Future
They are the resources the company allocates to researching, inventing, and perfecting new products, technologies, software, or formulations. Although accounting requires deducting them as an expense for the fiscal year, in economic practice they act as an essential reinvestment to sustain the long-term defensive moat.
How to interpret it: Vital in technology, software and pharma, and relevant in consumer for reformulations and sustainable packaging. A sudden cut in R&D can artificially inflate short-term profit, but mortgages the future growth of the business.
04
Amortization and Impairment of Goodwill and Intangible Assets (Goodwill & Intangibles Impairment)
Non-Monetary Entry
Records the depreciation or impairment of brands, patents, licenses, and goodwill (the premium paid when acquiring past companies). It is crucial to understand that this entry does NOT represent a real cash outflow from the cash account.
Practical example: Suppose a company buys a competitor believing that Brand A was worth €3,000 million. If after a year the market changes and auditors determine that it is now worth only €2,000 million, the company must record an impairment of €1,000 million in the income statement. That money does not leave the bank account today (it was already paid in the past); it is only an accounting adjustment that reduces reported profit without draining current cash.
05
Operating Income (EBIT) and Adjusted Operating Income (Operating Income / Adjusted EBIT)
Business Profitability
The Operating Income (EBIT) measures what the company generates purely from its everyday industrial and commercial activity, before servicing debt payments and taxes. It is the result of subtracting cost of sales, R&D, and selling, general and administrative expenses (SG&A) from revenue.
Why do we calculate Adjusted Operating Income? Because we adjust precisely extraordinary and non-cash items, such as the goodwill and intangible impairments explained above. By adding back those accounting impairments (which did not touch cash), we obtain the real and recurring operating profitability to accurately compare results year over year.
06
Interest Expense (Interest Expense)
Debt Load
It is the financial cost that the company pays to banks and bondholders for the debt incurred. It represents the periodic burden that financial leverage imposes on the business results.
Golden solvency rule: As a prudent investment rule, we should avoid businesses where interest expenses exceed 20% of operating income (Intereses / EBIT > 20%). If a company allocates more than one-fifth of what it earns operationally just to pay interest, it is left in a vulnerable situation to interest rate hikes or temporary sales declines.
07
Asset Impairment (Tangible Asset Impairment)
Non-Monetary Physical Adjustment
It is a concept completely analogous to the impairment of intangibles, but applied to physical and tangible assets: factories closed ahead of time, obsolete machinery, properties losing market value or defective inventories that must be written down or liquidated at a loss.
Actual impact: As with intangibles, this entry reduces net income on the income statement, but nor does it represent a cash outflow at that time. At Cifra this impact is isolated to understand the ongoing profitability of the assets that remain productive.
08
EBT - Earnings Before Taxes (Earnings Before Taxes)
Taxable Base
It is the profit the company generates once all operating costs, depreciation and debt expenses (EBIT minus net interest) have been covered, just before settling corporate income tax with the tax authority.
Analytical utility: EBT is the cleanest measure to compare companies in the same sector subject to different tax legislations or with different tax deductions, isolating the business from the tax burden.
09
Net Income (Net Income / Bottom-Line) and Taxes
Shareholder Bottom Line
It is the last line of the income statement (bottom-line): the final profit attributable to the company's shareholders after deducting corporate taxes from EBT (Net Income = EBT - Taxes). From it, Earnings Per Share (EPS) is calculated by dividing by the number of shares outstanding.
Tax rule: In U.S. and European companies, actual corporate taxes usually range habitually between 20% and 25% of EBT (the standard U.S. federal rate is 21% plus state taxes). If in a given year you see a company paying 5% or 40%, it is usually due to temporary tax credits, repatriation of profits or extraordinary accounting litigation that distort real net income.
Financial Statement · Solvency
Balance Sheet
Balance Sheet · Statement of Financial Position
The balance sheet it is a "snapshot" of the company's equity and financial health at a specific point in time (as of the close of the quarter or fiscal year). It details with total precision what resources and investments the company owns and how they have been financed, whether through third-party debt or shareholders' equity.
Assets vs. Liabilities vs. Shareholders' Equity
It is based on the accounting golden rule: Assets = Liabilities + Shareholders' Equity. The Assets are the economic resources and investments held by the company (cash, receivables, inventories, factories, brands). The Liabilities are the obligations to third parties (bank debt, bonds, suppliers). The Equity (Net Assets) represent the residual net value belonging to shareholders (Equity = Assets - Liabilities).
Current (Short-Term) vs. Total (Long-Term)
The temporal distinction is vital: the Current or Circulating groups assets and liabilities that will convert into liquidity or must be paid within less than 1 year (cash, receivables, inventory, short-term debt maturities). It measures day-to-day liquidity. The Non-Current / Total groups permanent investments and obligations at more than 1 year (fixed assets, brands, long-term debt), defining the strategic financial structure of the business.
Asset Analysis
The Key Lines of the Balance Sheet
Assets, liabilities, working capital, and solvency metrics to assess the strength of the business:
01
Cash and Equivalents (Cash & Cash Equivalents)
Immediate Liquidity
It is the liquid cash available in current bank accounts, demand deposits and ultra-safe very short-term money market instruments (such as U.S. Treasury bills or 3-month T-Bills) that can be converted into cash immediately.
The oxygen of the business: It constitutes the maximum guarantee of survival against recessions. A solid cash position allows operating without the burden of depending on bank credit and taking advantage of periods of stock market panic to acquire competitors or buy back shares at bargain prices.
They are sales of products or services that the company has already delivered and invoiced, but whose cash has not yet entered the bank account because customers enjoy an agreed payment term ("my customers tell me: "I'll pay you in 30, 60, 90 days or in 1 year"").
Collection and sales quality alert: If accounts receivable grow much faster than revenue, it usually indicates that the company is loosening its credit terms to inflate accounting sales with low-creditworthiness customers, sharply increasing the risk of defaults and delinquency.
03
Inventory (Inventory / Existencias)
Stored Goods
It is the set of raw materials, work-in-progress and finished goods stored awaiting sale and delivery to the end customer. A classic example: NIKE's warehouses packed with boxes of sneakers waiting to be sent to stores or distributors.
Cash tied up and risk of loss: Inventory is frozen capital that does not earn interest in the bank, generates ongoing costs for warehouse rent, insurance and refrigeration, and runs the risk of becoming obsolete or depreciating, forcing loss provisions or liquidation at aggressive discounts.
04
Accounts Payable (Accounts Payable / Suppliers)
Trade Financing
It is the direct reverse of accounts receivable: invoices that the company has pending payment to its suppliers of raw materials, packaging or services already received ("here I am the customer and I owe money to my supplier at 30, 60 or 90 days").
Free financing at 0% interest: It constitutes the most advantageous liability possible because it does not accrue bank interest. A business with strong bargaining power over suppliers can finance itself for free by paying at 90 or 120 days while collecting cash from its own customers.
★
Accounts Receivable, Inventory, and Accounts Payable: The Working Capital Cycle
Fundamental Case Study
These three line items determine the Operating Working Capital (also known as Operating Working Capital or OWC). It is the net cash that the business needs to keep tied up in day-to-day operations just to be able to operate:
Operating Working Capital = Accounts Receivable + Inventories - Accounts Payable
Accounts Receivable+3.000MCustomers owe us money
Inventories (Nike)+8.000MSneakers in warehouse
Accounts Payable-1.000MSupplier financing
Net Working Result10.000MNet capital tied up
Verified Claim: 100% Correct
Is your statement correct? Yes, it is mathematically exact and one of the most valuable lessons of fundamental analysis.
1. With 10% inflation (higher prices): Even if you sell the same number of sneakers, all amounts become 10% more expensive:
The accounts receivable go from 3,000M to 3,300M (they require +300M additional amounts tied up in customer invoices).
The inventories go from 8,000M to 8,800M (they require +800M additional amounts to replenish the same inventory at higher costs).
The accounts payable go from 1,000M to 1,100M (suppliers finance us +100M additional amounts).
Net cash impact to be financed:+300M + +800M - +100M = +1.000M (exactly 10.000M × 10% = 1.000M).
2. The exact same thing happens when we grow in volumes (+10% in units sold):
If Nike wants to sell 10% more physical sneakers, wishing it is not enough: it needs to physically manufacture 10% more pairs to fill its shelves and warehouses without suffering stockouts (+800M in physical inventory), grants trade credit on about 10% more orders to associated stores (+300M in customers) and its sole and fabric suppliers finance 10% of it (+100M in suppliers). The net result is exactly the same: the company has to put 1,000M of real cash out of its own pocket to finance that volume growth.
Warren Buffett's great lesson: Both inflation and volume growth consume cash in companies with high positive working capital. In fact, a company can "die of success" if it grows sales too fast without having cash to finance inventory and outstanding invoices. Conversely, businesses with negative working capital (collect cash and pay at 90 days, like Amazon or Inditex) generate more money in the bank every time they sell more units or raise prices.
05
Goodwill and Intangibles (Goodwill & Intangible Assets)
Non-Physical Assets
Encompasses intangible assets legally protected (trademarks, technological or pharmaceutical patents, licenses and software) and the Goodwill, which is the premium paid when acquiring another company above the net book value of its tangible assets.
Oversight of past purchases: If the acquired business does not generate the expected profits, management is required to record an accounting impairment (impairment), penalizing net income in the income statement (as we saw on line 04 of the income statement) without implying an additional cash outflow in that fiscal year.
It is the accumulated original acquisition value of all the company's physical and tangible assets: land, production plants, factories, heavy machinery, physical stores and transportation fleets, before applying accumulated accounting depreciation (Net Fixed Assets).
Historical capital intensity: It allows checking how much gross physical cash the company has needed to deploy over its trajectory. If gross fixed assets grow at high annual rates without equivalent growth in sales or EBIT, return on invested capital (ROIC) tends to erode.
07
Long-Term Investments (Long-Term Investments)
Strategic Portfolio
Financial assets the company plans to hold on the balance sheet with a horizon greater than 12 months: interests in associates or unconsolidated subsidiaries, long-term fixed-income securities, or portfolios of listed stocks (such as Berkshire Hathaway's famous stock portfolio).
Income and capital gains: They provide regular non-operating income via dividends or interest and represent a secondary liquidity buffer if management decides to divest at an opportune time.
08
Loans and Short-Term Debt (Short-Term Debt & Current Portion)
Vencimiento < 1 Año
Financial commitments due within the next 12 months: drawn bank credit lines, commercial paper (commercial paper) and the exact portion of long-term debt maturing within the current fiscal year.
Liquidity and refinancing risk: It should be monitored directly against available cash and equivalents. If short-term debt exceeds cash and the business does not generate sufficient operating cash flow, the company depends on the banks' goodwill to renew its policies or risks a liquidity squeeze.
09
Long-Term Debt (Long-Term Debt)
Structural Leverage
Formal bank financing and corporate bond issuances with maturities over 12 months. It constitutes the backbone of the financial leverage with which the company funds its expansion and acquisition projects.
Structure and interest rates: It is essential to review in the balance sheet notes whether the debt is issued at a fixed or variable interest rate, as well as the multi-year maturity schedule (debt maturity profile) to avoid debt concentrations in difficult years.
10
Equity (Shareholders' Equity / Patrimonio Neto)
Shareholder's Book Value
It is the residual net book value that would belong to shareholders if all assets were liquidated and all liabilities paid (Equity = Total Assets - Total Liabilities). It is made up of the capital contributed by the partners and all reserves and accumulated earnings retained in the company throughout its history.
The paradox of negative equity: Companies with extraordinary pricing power and minimal physical asset requirements (such as McDonald's, Starbucks, AutoZone, or Domino's) frequently show negative shareholders' equity. This does not mean bankruptcy, but rather that they have generated so much cash flow that they have repurchased billions in their own shares at market prices far above their par value.
11
Net Debt (Net Debt)
Master Solvency Metric
It is the definitive magnitude to gauge the company's real financial leverage: Total Financial Debt (Short Term + Long Term) - Cash and Equivalents.
Solvency interpretation:
If negative (Net Cash): The company has more cash in the bank than all of its financial debt combined. It is the position of maximum solvency and immunity against economic crises.
If positive: Debt must be contrasted with the ability to generate earnings through the ratios Net Debt / EBITDA o Net Debt / FCF (as a prudent rule, preferably below 2.5x - 3.0x).
Financial Statement · Real Cash
Cash Flows
Cash Flow Statement · Statement of Cash Flows
The cash flow statement (Cash Flows) records the actual movement of money in and out of the company's accounts during the period. It eliminates all non-cash accounting artifices and provisions from the income statement, allowing verification of whether accounting profits translate into physical, hard cash.
The three activities of the cash flow
It is divided into three essential branches: Operating (CFO) (cash generated from the sale of the product or service and collection from customers), Investing (CFI) (money invested in machinery, technology and plants —CAPEX— or acquisitions) and Financing (CFF) (dividend payments, debt amortization and share buybacks).
Why is it the investor's king metric?
Because "profit is an opinion, but cash is a fact". By subtracting CAPEX from Operating Cash Flow we obtain the Free Cash Flow (FCF): the real surplus cash to reward shareholders, buy back shares, reduce debt or make strategic acquisitions without compromising the business.
Real Liquidity Analysis
The Key Lines of the Cash Flows
Essential line items of operating cash flow, capital investments, and capital allocation to shareholders:
It is the compensation to executives and employees through stock options or restricted stock units (RSUs). In the income statement it is deducted as another operating expense; however, in the cash flow statement it is added back to operating cash flow (CFO) with the argument that no cash actually left the bank account during that fiscal year.
The dilution trap: Even if no money leaves the cash today, is directly diluting our shares: each year new securities are issued that dilute our stake in the company. In addition, stock options are granted at a discount to the actual market price. Therefore, to perform a conservative and realistic valuation analysis, it is highly recommended to deduct the full amount of that line from Free Cash Flow to impute the real economic cost borne by the shareholder due to dilution.
02
Change in Working Capital (Change in Working Capital)
Operating Liquidity Adjustment
Reflects the direct cash impact of the net change in accounts receivable, inventories, and accounts payable between the beginning and end of the period (the working capital cycle we analyze in the balance sheet). If customers take longer to pay or Nike shoe inventory accumulates in the warehouse, this line drains cash (negative sign); if suppliers finance more purchases or collections are timely, it releases cash (positive sign).
It is not static: normalize outliers: This line item is neither linear nor fixed; it undergoes sharp fluctuations due to commercial seasonality, preventive procurement peaks, or price fluctuations. If in a given year it shows an abnormal or unusual value, it must be adjusted and normalized so as not to project transitory distortions as if they were the business's structural cash generation capacity.
03
Cash from Operations (Cash Flow from Operations - CFO)
Gross Operating Cash
It is the real liquid cash entering the company's bank account derived exclusively from its core operating activity after collecting from customers, paying suppliers for supplies, wages and taxes. Starting from accounting net income, it adds back depreciation, impairments and SBC, and applies the net change in working capital.
The thermometer of truth: Unlike net income (which can be shaped with aggressive accrual accounting criteria), CFO demonstrates whether the business model generates tangible cash. It constitutes the indispensable basis before undertaking investments in assets or rewarding shareholders.
04
CAPEX - Capital Expenditures (Capital Expenditures / PP&E Purchases)
Investment in Physical Capacity
It is the cash disbursed for the acquisition, modernization and expansion of tangible and productive assets: industrial plants, heavy machinery, logistics fleet, physical stores or server infrastructure.
Maintenance vs. Growth and the analyst's golden rule:
Maintenance CAPEX: The essential money to replace worn-out machinery and keep the business's competitive position intact without shrinking its size.
Growth CAPEX: Voluntary investment aimed at opening new stores, doubling factories or expanding into new geographic markets.
The accounting reality at the SEC: In the vast majority of 10-K and 10-Q reports companies no desglosan which amount is maintenance and which is growth, grouping it all into a single generic line item.
Practical estimation formula: Typically, maintenance CAPEX tends to approximate:
Maintenance CAPEX ≈ Depreciation and Amortization × (1 + Inflation)
Since replacing today an amortized asset acquired years ago is more expensive due to accumulated inflation, any outlay exceeding this threshold can prudently be considered growth investment.
05
Acquisitions (Acquisitions / M&A Cash Outflow)
Inorganic Growth
It is the cash outflow in the Cash Flow from Investing (CFI) intended for the acquisition of other competing companies, complete product lines, or external patent portfolios.
Overpayment risk and Goodwill creation: Acquisitions usually involve large cash outflows and generate Goodwill on the balance sheet. Often, paying inflated multiples for outside companies destroys shareholder value if the projected synergies are not realized in reality.
06
Share Buybacks (Share Repurchases / Buybacks)
Shareholder Remuneration
It is the cash outflow within the Cash Flow from Financing (CFF) in which the company goes to the stock market to buy back its own shares with cash from the treasury and retire them (permanently cancel them).
What are they and what effect do they have on your investment?
By removing shares from the market, the total pie of the business is divided among fewer portions. As a consequence, each share you hold comes to own a larger percentage of future sales, profits, and dividends (automatically increasing Earnings Per Share or EPS without the company needing to sell more).
Fundamental nuance: They only generate real value if management executes them when the stock trades below its intrinsic value or at reasonable prices. If the company buys back at bubble valuations or uses them simply to offset the dilution of executives' Stock Options, it is burning shareholder cash.
07
Dividends Paid (Dividends Paid)
Direct Cash Distribution
It is the net disbursement in the Financing Cash Flow through which the company transfers cash directly from its bank account to shareholders' current accounts as periodic compensation for their invested capital.
Sustainability stress test: The dividend is irrefutable proof that profits exist in real money. However, it must be comfortably backed by the Free Cash Flow (FCF) organic (reasonable payout ratio Dividendos / FCF < 60%-70%). If a company pays dividends by taking on debt because its free cash flow is insufficient, it endangers its long-term financial health.
Sector Analysis
What the AI takes into account when analyzing each sector: focus areas, specific metrics, accounting traps, and special treatments for each business model.
The AI classifies the company by ticker, SIC code, and automatic classification, and applies its sector lens. This section will be expanded as subsectores (Level 3) as its specific rules are documented. The full methodology is in How Cifra's AI analyzes each sector.
Sector · Consumer Staples
Defensive Consumer
Consumer Staples · Food, beverages, tobacco, household and personal care
Consumer staples companies —such as Coca-Cola, Procter & Gamble, Kraft Heinz or Molson Coors— with inelastic demand, strong brands and recurring cash. AI does not judge the business by the sales headline, but by the ability to raise prices without losing volume and to convert that profit into real cash for the dividend. Statements are presented in dual Normal and Adjusted columns, and Cash Flow allows only two adjustments: working capital and cash taxes (SBC is never added back).
The AI approach
Volume and pricing power versus private labels, raw material and packaging costs, cash conversion and dividend sustainability, and deleveraging after historical brand acquisitions.
Supported subsectors
Food · Beverages · Tobacco · Household and personal care · Food retail and distribution · Agriculture and processing.
Analysis focus areas
What the AI looks at in this sector
The points the AI checks on a priority basis in the income statement, cash flow, and balance sheet of these companies:
01
Volume vs Price/Mix (Volume vs Price/Mix)
Demand
Sales can grow by selling more units (healthy growth) or only by passing inflation through to prices. If volume falls persistently while price rises, pricing power is running out against the distributor's private labels.
What the AI looks at: The AI breaks down growth between volume and price/mix when the filing discloses it, and always compares against the same period of the prior year.
02
Margins and input costs (Gross margin & input costs)
Margins
Sensitivity to agricultural commodities (coffee, sugar, cocoa, wheat) and to packaging (aluminum, cardboard, glass) determines gross margin. A margin deterioration that is not recovered through price signals a structural problem.
What the AI looks at: The AI verifies gross profit against the gross margin published in the MD&A and analyzes the evolution of adjusted operating margin, normalizing impairments and taxes at 23%.
The dividend is irrefutable proof that profit exists in real money. The question is not how much it pays out, but whether free cash flow covers it comfortably or whether the payout is being financed with debt.
What the AI looks at: The AI calculates cash conversion (CFO over profit) and payout over FCF, with working capital normalized by its historical weight of 10 fiscal years.
04
Deleveraging after acquisitions (Deleveraging after M&A)
Balance Sheet
Many defensive companies grew by buying brands on credit. The net debt assumed is only acceptable if it declines steadily with free cash flow; if it gets stuck or needs refinancing, the dividend is at risk.
What the AI looks at: The AI reconstructs net debt, maturities by year, and the capital allocation reconciliation (free cash flow, dividends, buybacks, cash, and debt).
Information Technology · SaaS, cloud, semiconductors and hardware
Recurring revenue models, high gross margin and stock-based compensation (SBC) that distorts 'non-GAAP' earnings. The AI treats SBC as a real operating cost —it keeps it fully in the Adjusted column— and verifies whether buybacks reduce the share count or merely sterilize employee dilution. Amortization of acquired intangibles remains a cost because it reflects the real wear and tear of the product.
The AI approach
Dilution as a cost, revenue recurrence (ARR/NDR, churn), cash versus deferred contract revenue, and ability to sustain R&D spending without financial support.
Supported subsectors
Enterprise software and SaaS · Cloud and infrastructure · Cybersecurity · Platforms · Semiconductors · Hardware.
Analysis focus areas
What the AI looks at in this sector
The points the AI checks on a priority basis in the income statement, cash flow, and balance sheet of these companies:
01
Critical SBC filter (Stock-Based Compensation)
Dilution
Many tech companies boast high adjusted profit because they exclude stock-based salaries. It is a real cost: it dilutes existing shareholders and only disappears if buybacks offset it.
What the AI looks at: The AI quantifies SBC as a percentage of sales and assesses whether net buybacks reduce shares or merely offset dilution. It never adds back SBC to adjusted profit.
02
Recurring revenue and retention (ARR / NDR / Churn)
Recurrencia
The quality of the software business lies in recurrence: how much annual recurring revenue it generates (ARR), how much the relationship with existing customers grows (NDR/NRR), and how much is lost each year (churn).
What the AI looks at: The AI documents these metrics as published in the report, along with the percentage of RPO to be recognized in the next 12 months.
03
Cash vs. deferred revenue (Deferred revenue & cash conversion)
Cash
Early collection on multi-year contracts temporarily inflates operating cash flow. Cash must be read alongside the change in contract liabilities, not in isolation.
What the AI looks at: The AI explains the effect of deferred revenue on CFO and applies the working capital adjustment using the historical weight of 10 fiscal years.
04
R&D and product intangibles (R&D intensity)
Investing
Defending the competitive moat is paid for with recurring R&D, which does not appear in CAPEX. The amortization of purchased technology and customer portfolios is real wear and tear and is not added back.
What the AI looks at: The AI measures R&D intensity over sales and only reverses goodwill impairments; amortization of intangibles remains as a cost.
If the company pays its employees with stock, take a look at the "Adjusted Net Income" line and compare it with the annual dilution of the share count.
Sector · Consumer Discretionary
Consumer Discretionary
Consumer Discretionary · Retail, restaurants, automobiles and travel
Companies that depend on consumer disposable income and, many, on a key quarter of the year. Here physical unit volume disappears in favor of a queen metric: comparable sales (comps). AI separates organic growth from mature stores from new store openings and monitors inventory, which is the precursor to markdowns and impairments.
The AI approach
Comparable sales and net openings, traffic and average ticket, inventory management and seasonality (compare against the same quarter of the prior year), with specific rules for restaurants and franchised business.
Supported subsectors
Retail and distribution · Restaurants (own rules active) · Apparel and accessories · Home and leisure · E-commerce · Dealerships · Housing · Auto parts · Automobiles · Travel and leisure · Education.
Analysis focus areas
What the AI looks at in this sector
The points the AI checks on a priority basis in the income statement, cash flow, and balance sheet of these companies:
01
Comparable sales and units (Comparable sales / Same-store sales)
Demand
Opening stores always adds sales; what reveals the health of the business is how much mature stores grow (comps). For franchisees, the parent company's revenue is not the network's sales (system-wide sales).
What the AI looks at: The AI reads comps with their published definition, net openings, and, in restaurants, the network and unit count versus revenue chart.
02
Inventory and days of stock (Inventory & DIO)
Margins
Inventory growing far above sales anticipates forced markdowns and inventory write-downs that eat into next semester's gross margin.
What the AI looks at: The AI calculates days inventory outstanding (DIO) and compares them against sales trends and against the same quarter of the prior year.
03
Traffic and average ticket (Traffic & average ticket)
Operational
Selling more can come from receiving more visits or from each visit spending more. Separating traffic and ticket allows detecting whether growth is real or just price inflation.
What the AI looks at: The AI captures traffic, ticket, and online sales when the filing breaks them out, and cross-references them with comps.
04
Working capital seasonality (Seasonality & working capital)
Cash
In retail, working capital is usually negative (suppliers finance inventory) and cash is concentrated in the strong quarter: Christmas in general retail, summer in leisure. Comparing against the prior quarter distorts.
What the AI looks at: The AI adjusts working capital using the historical weight of 10 fiscal years and always compares against the same quarter of the prior year.
Restaurants: own rules already active with network chart, comps and net openings in each report.
Sector · Energy
Energy
Energy · E&P, refining, services, midstream, coal and uranium
Businesses whose results depend on the price of oil and gas, but where quality is measured by something more stable: producing cheaply. Depreciation of oil assets (DD&A/depletion) is so high that EBITDA takes center stage, and the AI distinguishes whether profit grows due to more volume, better realized price or lower costs.
The AI approach
Production and realized price versus WTI and Henry Hub benchmarks, lifting cost, reserve replacement, fee-based midstream with stable flows, and dividend sustainability (often variable) according to the cycle.
Supported subsectors
Integrated oil and gas · Exploration and production (E&P) · Oil services · Refining and marketing · Midstream · Coal · Uranium.
Analysis focus areas
What the AI looks at in this sector
The points the AI checks on a priority basis in the income statement, cash flow, and balance sheet of these companies:
01
Production and realized price (Production & realized price)
Demand
Raising production with high crude is not an achievement; the relevant data point is the realized price versus benchmarks and the cost per barrel. A realized price that is heavily discounted from the market signals issues with mix, contracts or logistics.
What the AI looks at: The AI separates the volume effect from the price effect and compares the realized price with WTI and Henry Hub when the filing publishes it.
02
DD&A and extraction cost (DD&A & lifting cost)
Margins
The amortization of wells and reserves (depletion) sinks accounting profit without being a cash outflow for the period. Lifting cost per barrel is the true measure of operating efficiency.
What the AI looks at: The AI analyzes EBITDA, DD&A, and lifting cost per barrel, and does not adjust for items the company does not disclose in its reconciliation.
03
Fee-based midstream (Take-or-pay & fee-based)
Structure
Transportation and storage with take-or-pay contracts charges for service, not for the commodity price. High debt and stable cash flow are structural: the alarm is not in volatility, it is in interest coverage.
What the AI looks at: The AI reviews interest coverage, maturities, and the proportion of cash flow with tariff versus that exposed to price.
04
Reserves, capex and dividend (Reserves & capital discipline)
Investing
Replenishing reserves costs capex; the variable dividend is just another part of the capital budget. If the company distributes more than it generates after investing, it is decapitalizing the business.
What the AI looks at: The AI contrasts maintenance capex versus expansion capex, free cash flow, and dividend coverage through the cycle.
In energy, EBITDA and cash flow per barrel matter more than accounting profit; the capital allocation reconciliation is read over the full cycle, not a single quarter.
Sector · Materials
Materials
Materials · Chemicals, metals, mining, packaging and construction
Chemicals, metals and packaging producers whose margins depend on the spread between what raw materials cost and what is charged for the finished product. The AI explains the spread, not just the price: record profit with flat raw materials is one thing and profit sustained by the naphtha cycle is another.
The AI approach
Input/output spreads, price versus volume and capacity utilization, LIFO effect in chemicals and steel, environmental liabilities and, in mining, reserves, capitalized stripping and royalties.
Supported subsectors
Commodity chemicals and specialties · Metals and mining · Packaging · Paper and forest products · Construction materials.
Analysis focus areas
What the AI looks at in this sector
The points the AI checks on a priority basis in the income statement, cash flow, and balance sheet of these companies:
01
Commodity spreads (Input/output spreads)
Margins
In chemicals and refining, margin is the difference between input cost (naphtha, gas, ore) and output price. The same profit means different things depending on how both sides moved.
What the AI looks at: The AI explains margin evolution from the spread and separates the effect of cost declines from that of price increases.
02
Price vs volume and utilization (Pricing vs volume & utilization)
Cycle
A commodity producer does not set its price; what dominates is capacity utilization. High utilization and rising spreads anticipate strong profits; idle capacity sinks them.
What the AI looks at: The AI breaks down growth between price and volume and reads utilization and plant outage commentary from the MD&A.
03
LIFO and environmental provisions (LIFO & environmental liabilities)
Accounting
LIFO liquidations inflate profits in specific years in chemicals and steel, and remediation and facility closure obligations are real costs that do not go through financial debt.
What the AI looks at: The AI distinguishes non-recurring LIFO effects and reviews provisions and environmental contingencies in the notes.
04
Mining: reserves and royalties (Reserves, stripping & royalties)
Investing
In mining, capitalized stripping defers costs to the balance sheet and future production sales (streams and royalties) change the cash profile. Ore grade and reserves define the useful life.
What the AI looks at: The AI reviews proven/probable reserves, TC/RC costs at smelters, and stream and royalty obligations in the notes.
Environmental and closure liabilities are business costs: the AI cites them from the notes and does not mix them with financial debt.
Sector · Industrials
Industrials
Industrials · Equipment, aerospace, transportation and services
Machinery and equipment manufacturers, aerospace and defense, logistics, industrial distribution and business services. They operate with long cycles, visible order backlogs and high fixed costs that amplify any change in sales. The AI reads the order backlog first and then margins.
The AI approach
Order backlog and book-to-bill, operating leverage, margin mix between original product and aftermarket-services, and separation between maintenance and expansion capex.
Supported subsectors
Aerospace and defense · Machinery and electrical equipment · Industrial distribution · Transportation and airlines · Waste and industrial services · Business services and conglomerates.
Analysis focus areas
What the AI looks at in this sector
The points the AI checks on a priority basis in the income statement, cash flow, and balance sheet of these companies:
01
Order book and book-to-bill (Backlog & book-to-bill)
Demand
Backlog is the best snapshot of future demand. A book-to-bill above 1.0 indicates that more orders are received than delivered: the backlog grows and supports subsequent revenue.
What the AI looks at: The AI reads the backlog and book-to-bill when the filing discloses them and cross-references them with sales and margin trends.
02
Operating leverage (Operating leverage)
Margins
With large factories and fixed costs, each point of sales decline is multiplied in operating income. The same effect works in favor when demand recovers.
What the AI looks at: The AI compares the percentage change in operating income with that of sales to measure the magnitude of operating leverage.
03
Mix OEM vs aftermarket (OEM vs aftermarket mix)
Structure
New equipment is sold at thin margins; the recurring parts and service business delivers much higher margins. The mix explains why two quarters with identical sales produce different profits.
What the AI looks at: The AI separates margin by segment and monitors the proportion of recurring service revenue when the filing breaks it out.
04
Maintenance vs. expansion CAPEX (Maintenance vs growth CAPEX)
Investing
Renovating machinery to stay competitive is not the same as building new capacity. Confusing them inflates the perception of growth and hides the real cost of keeping the business running.
What the AI looks at: The AI distinguishes, using the filing information, maintenance capex from expansion capex and subtracts it to calculate available FCF.
In aerospace and defense, many contracts are long-term fixed-price: AI monitors cost estimate charges when the filing discloses them.
Sector · Health Care
Health care
Health Care · Pharma, biotechnology, medtech, services and distribution
Pharmaceuticals, biotechnology (including pre-commercial), medical devices, hospitals, distribution and pharmacies, life sciences and animal health. Here R&D is maintenance investment that does not go through CAPEX: the AI keeps it as an expense and explains in its own note its amount, its weight on sales and its evolution. In companies without profits, the focus shifts to cash.
The AI approach
R&D as a real expense, product intangibles and IPR&D that are not reversed, liquidity and dilution in pre-commercial biotechnology, and peculiarities of each model: rebates and channels in pharma, elective procedures in medtech, payer mix in services, thin margins and working capital in distribution.
Supported subsectors
Pharmaceuticals · Biotechnology (incl. pre-commercial) · Medtech · Healthcare services and providers · Distribution and pharmacies · Life sciences · Animal health.
Analysis focus areas
What the AI looks at in this sector
The points the AI checks on a priority basis in the income statement, cash flow, and balance sheet of these companies:
01
R&D as maintenance investment (R&D as maintenance capex)
Investing
Without R&D there is no new product and the pharmaceutical business fades when patents expire. It is the company's real investment and does not appear in CAPEX, so the AI keeps it in expenses and quantifies it.
What the AI looks at: Own note with the R&D amount, its percentage of sales and its annual evolution; it is never excluded from adjusted profit.
02
Product intangibles and IPR&D (Product intangibles & IPR&D)
Accounting
The amortization of marketed products is the wear and tear of the patent that generates sales; not adding it back disguises the cost. Only goodwill impairment is reversed with a note.
What the AI looks at: The AI keeps product amortization and IPR&D impairment as a cost in the Adjusted column and only reverses goodwill.
A company without revenue or profits lives off its cash. The question is not profit (which is negative by design), but how many months of runway it has left and at the cost of how much dilution.
What the AI looks at: Visible notice in the report, with burn rate, cash/runway, convertibles and use of ATM or capital raises. The pipeline is not evaluated.
In pharma, gross versus net revenue matters (rebates, 340B, chargebacks) and distributor inventories; in medtech, the razor/blade model and procedures; in services, the payer mix; in distribution, working capital.
What the AI looks at: The AI adapts the inspection to the subsector and reads volume, channel, and reimbursement metrics exactly as published in the filing.
In healthcare, losses at a pre-commercial biotech are not read as business deterioration: AI distinguishes the business model before judging the result.
Sector · Utilities
Utilities
Utilities · Regulated electric, gas and water · IPP/merchant
Regulated utilities, natural gas distribution and water, and independent power producers (IPP/merchant). Regulated profit is essentially an authorized return on invested capital: everything revolves around the rate base and the dividend. High debt and negative free cash flow are the business design, not a warning signal on their own; what is monitored is coverage and the cost of debt.
The AI approach
Rate base, authorized ROE and rate cases, growth capex financed with debt and equity, dilution from ATM/DRIP, and separation of the regulated business from the merchant portion exposed to energy prices.
Supported subsectors
Regulated utilities and multi-utilities · Regulated natural gas distribution · Water · IPP/merchant.
Analysis focus areas
What the AI looks at in this sector
The points the AI checks on a priority basis in the income statement, cash flow, and balance sheet of these companies:
01
Rate base and authorized ROE (Rate base & allowed ROE)
Structure
Rates are set to return an authorized ROE on invested capital (rate base). The larger the rate base that grows with capex, the greater the regulated profit; rate cases are the milestones that review that profitability.
What the AI looks at: The AI explains the capex plan, pending rate cases, and the approved rate of return when the filing discloses them.
02
Structurally high debt and negative FCF (Structural leverage & negative FCF)
Balance Sheet
Rate base capex is financed with debt and equity issuances while customers pay the tariff. The alarm is not the debt level itself: it is that interest rates rise, coverage tightens, or maturities concentrate.
What the AI looks at: The AI reviews interest coverage, maturities by year, and average cost, without treating regulated debt as the debt of a normal company.
03
ATM/DRIP dilution and shareholders' equity (Equity issuance & book value)
Dilution
Many utilities continuously issue shares (ATM/DRIP) to finance their investment plan. Issuing above book value creates value for shareholders; below it, destroys it.
What the AI looks at: In 10-Ks, Cifra adds a deterministic "Equity" section: equity, book value per share, assets and share count change.
04
Regulated vs merchant mix (Regulated vs merchant mix)
Risk
In IPP/merchant, part of the result is not protected by tariffs: it depends on power prices, capacity markets and contracted hedges. Mixing both worlds distorts the risk profile.
What the AI looks at: The AI separates regulated results from market-exposed results when the filing breaks them out, and reads hedges as part of the thesis.
The deterministic "Equity" section appears only in the 10-K: in quarterly reports, Cifra explains dilution with the data published in the filing.
Sector · Communication Services
Communication
Communication Services · Telecom, cable, media, publishing and streaming
Telecommunications, cable and pay satellite, broadcasting, publishing and film/streaming/entertainment. The core is recurring subscriber revenue versus the actual cost of content and network. Amortization of produced or licensed content is an operating cost and is not added back: the key streaming metric is content spend versus its amortization.
The AI approach
Subscriber revenue and ARPU versus content and network costs, spectrum and license intangibles that remain as an expense, structural debt of telecoms, network capex and spectrum auctions, and advertising with its biennial election effect.
Supported subsectors
Telecommunications · Cable and pay satellite · Broadcasting · Publishing and press · Film, streaming and entertainment (studios, theaters, sports, music and satellite radio).
Analysis focus areas
What the AI looks at in this sector
The points the AI checks on a priority basis in the income statement, cash flow, and balance sheet of these companies:
01
Cash vs. accounting in the content (Content spend vs amortization)
Cash
Streaming can report profits while burning cash: content spend is capitalized on the balance sheet and amortized over the title's useful life. If content spend systematically exceeds its amortization, accounting income runs ahead of cash.
What the AI looks at: The AI compares content spend with its amortization and keeps the latter as a real operating cost in the Adjusted column.
02
Spectrum, licenses and brands (Spectrum & license intangibles)
Accounting
Radio spectrum and licenses are assets with real wear: their amortization remains a cost (as in technology and healthcare) and only goodwill impairment is reversed with a note.
What the AI looks at: The AI keeps spectrum and license amortization in adjusted profit and only reverses goodwill impairment.
03
Structural debt and network capex (Network capex & structural debt)
Balance Sheet
In telecom and cable, high debt and negative FCF after network capex are not alarms on their own: subscriber service amortizes the network. Spectrum auctions are non-recurring capex and tower leases are not financial debt.
What the AI looks at: The AI reviews interest coverage, maturities, and cost of debt, and treats towers and spectrum according to their contractual nature.
04
Advertising and election effect (Advertising & biennial election effect)
Cycle
In broadcasting and print, advertising is cyclical and distorted in election years (even/odd effect). Recurrence lies in retransmission, subscription or affiliation; advertising is the volatile part.
What the AI looks at: The AI separates advertising from recurring revenue and reads digital subscribers, ARPU, churn, and audience when disclosed.
In streaming and studios, the release schedule and content amortization explain much of quarterly volatility: AI reads it with the breakdown disclosed in the filing.
Sector · Real Estate
Real Estate / REITs
Real Estate · U.S. listed equity REITs.
Equity REITs in industrial and logistics, retail and net lease, residential, offices, data centers, self-storage, healthcare, hotels, towers and timber/farmland. GAAP earnings are useless: real estate depreciation drags them down and the obligation to distribute at least 90% of taxable income makes a payout above 100% of EPS normal. The right lens is FFO and, when the company reports it, AFFO.
The AI approach
FFO and AFFO (reported, not reinvented), dividend judged against FFO, occupancy and leasing spreads, same-store NOI, book value versus market price (P/B) and financing via ATM/DRIP with its effect on book value per share.
Supported subsectors
Industrial and logistics · Retail and net lease · Residential · Offices · Data centers · Self-storage · Healthcare · Hotels · Towers · Timber/farmland and specialized.
Analysis focus areas
What the AI looks at in this sector
The points the AI checks on a priority basis in the income statement, cash flow, and balance sheet of these companies:
01
The FFO/AFFO lens (Funds From Operations & Adjusted FFO)
Profit
FFO (NAREIT standard) adds back depreciation of properties and impairments, and subtracts gains on sales. Cifra reads the reported FFO from the filing table and only calculates an approximation when the company does not publish it. AFFO/CAD is only shown if disclosed.
What the AI looks at: The FFO row always prefers the reported figure with reconciliation; each company's non-standard adjustments are cited as is.
02
The dividend is judged against FFO (Dividend payout vs FFO)
Dividend
A payout on net income above 100% is normal in a REIT due to accounting depreciation. Sustainability is measured against FFO and, if available, against AFFO/CAD, which deducts maintenance capex.
What the AI looks at: The AI compares the dividend with reported FFO and AFFO/CAD and explains the difference versus payout over EPS.
03
Occupancy and comparable rents (Occupancy & same-store NOI)
Operational
Occupancy (physical and economic), leasing spreads, and same-portfolio NOI measure organic health. These are the metrics that anticipate future revenue better than any aggregate data.
What the AI looks at: In the 10-K, Cifra adds a "Portfolio occupancy" section with the 10-year series; in the 10-Q, when the quarterly series is reliable, with a chart.
04
Book value vs market price (Book value & P/B)
Valuation
A REIT's book value is historical cost less accumulated depreciation, not market NAV. Comparing price to book value (P/B) helps see when the market pays more or less than the books, without confusing it with the actual valuation of the properties.
What the AI looks at: The 10-K includes "Book Value and Share Price" with P/B and the 10-year share price. NAV is not calculated.
05
Equity raises and financing (ATM/DRIP & refinancing)
Dilution
ATM/DRIP programs are the norm in the sector. Issuing shares above book value creates book value per share; issuing below dilutes it. High debt (4-6× Net Debt/EBITDA) is the business design, not an alarm by itself.
What the AI looks at: The deterministic section on capital raises quantifies shares issued, implied average price, new debt with its rate, and real estate purchases.
mREITs (mortgage REITs) and real estate services companies are out of scope: only equity REITs that own and lease properties are admitted.
Sector · Financials
Financials
Financials · Banking, insurance, capital markets and payments
Banks, consumer finance, insurance and managed care, capital markets (asset managers, brokers, exchanges, data/ratings) and payments. Here the business is the balance sheet and the standard engine (sales, gross profit, working capital, FCF) does not apply as is: the AI uses a balance sheet lens for banking, insurance and consumer finance, and reserves the normal operating format for fee-based and payments businesses.
The AI approach
MARGIN block (net interest margin, fees, provisions for credit losses), BALANCE SHEET AND QUALITY block (loans, deposits, delinquencies, coverage) or RESERVES AND FLOAT in insurance, and CAPITAL AND RETURN block (dividend and buybacks conditioned by regulatory capital).
Supported subsectors
Banking · Consumer finance · Insurance and managed care · Capital markets (asset managers, brokers, exchanges, data/ratings) · Payments.
Analysis focus areas
What the AI looks at in this sector
The points the AI checks on a priority basis in the income statement, cash flow, and balance sheet of these companies:
01
MARGIN Block (NIM & provisions)
Profit
A bank's engine is net interest income (what it charges for lending minus what it pays to fund itself) plus fees, minus the provision for credit losses, which is a real cost and is never adjusted. The provision is read against net charge-offs (NCO).
What the AI looks at: The AI replaces the classic income statement with the MARGIN block, using the definition of delinquency and provisions published by the bank itself.
02
BALANCE SHEET AND QUALITY Block (Loan book & credit quality)
Risk
Loans, deposits, loan-to-deposit ratio, 90+ delinquency/nonaccrual, provision coverage and tangible book value. Deposits are not debt-as-risk: they are the balance sheet model. In insurance, the block becomes RESERVES AND FLOAT.
What the AI looks at: CET1 and regulatory ratios are shown only if the filing publishes them: the system does not calculate them. "Operating EPS" figures are cited separately.
03
Capital and return (Capital return & regulatory capital)
Capital
Dividends and buybacks are read as conditioned by regulatory capital: returning capital is correct only if the bank maintains sufficient buffers for the cycle.
What the AI looks at: The AI reconciles equity (Net Income ± AOCI + issuances − dividends − buybacks) against the change in balance sheet equity.
04
Deterministic 10-K series (10-year ROE, NIM & credit series)
Historical
Profitability and credit quality are only judged with years of history: ROE, NIM, and efficiency ratio, and delinquency and coverage. In insurance, the published combined ratio or MLR.
What the AI looks at: The 10-K includes "Capital and Profitability" and "Credit Quality" with 10-year charts; for insurers, "Book Value and ROE."
Fee-based businesses (asset managers, exchanges, data/ratings, brokerages, and payments) are analyzed with the standard engine used for other sectors: here the balance sheet lens applies only to banking, consumer finance, insurance, and managed care.
Alert Signals
Red flags to detect problems before they show up in the price: thresholds, formulas and where to look in the report.
No red flag is an isolated proof. The more that accumulate in the same company, the higher the probability that something doesn't add up. Each card explains the threshold or formula, where to look in the report and what AI checks when analyzing the company.
Red flags
Management
Management & Governance
The first red flag is not in the numbers, but in how management behaves with shareholders' capital. Pro-cyclical buybacks, auditor changes, restatements, or broken promises are signals seen in the report before they are seen in the price.
What is judged in this group
Whether management buys shares when they are cheap and stops when they are expensive, whether the accounts are audited without friction, and whether promises are kept. The treatment of shareholder capital and accounting truth is judged here.
How they are used
Each card has two parts: the reasoning (why it is a signal) and the detector (the formula, the threshold and where to look). Cifra's AI applies its own deterministic checks during the analysis and these cards let you replicate them by hand on the filing.
Red flags
Signals worth watching
From the most visible to the most subtle. All can be checked with data published in the report itself:
01
Pro-cyclical buybacks (Buybacks at highs, silence at lows)
Capital
Buying shares at highs and stopping buybacks when the stock falls is the clearest signal that the program is not aimed at creating value, but at supporting the price (and the incentives tied to it). The shareholder receives fewer expensive shares and loses the opportunity for the company to buy cheap.
How to detect it: Compare the implied average price of each buyback (amount ÷ shares repurchased from Item 2 of the 10-Q or the statement of changes in equity) with the period's trading range, and see if the program stopped right after declines. Also cross net buybacks with SBC, which may be just masking dilution.
02
Auditor or accounting policy changes (Auditor changes & restatements)
Accounting
An auditor change without a solid explanation, a change in accounting policy that improves results just when needed, or a restatement of past accounts are classic signs of tension between management and those who review the accounts.
How to detect it: Review the auditor's report (opinion, qualifications, going concern), the note on accounting changes, and the presence of restatements or material weaknesses in internal control. The AI summarizes them when relevant.
03
Management leaving or selling (Insider selling & management turnover)
Governance
Unusual CEO or CFO turnover and insider sales outside scheduled plans can anticipate problems the market does not yet know about. A leadership team that changes every year executes no strategy.
How to detect it: The 10-K documents changes in senior management, and the proxy and Form 4 document insider transactions. The AI summarizes them in the annual analysis when material.
Missing guidance is normal; missing it year after year reveals either a business less predictable than management claims or an effort to prop up the stock price with optimism. Both are paid for with declines when reality surfaces.
How to detect it: Compare prior guidance (8-K and 10-K) with actual reported results and review forecast revisions. AI compares the absolute figures promised with those reported.
The AI audits each report with its own rules and detects red flags in the results; these governance flags are reviewed especially in the 10-K and the proxy.
Red flags
Business
Operations & Earnings
When the headline remains positive but the business deteriorates, the problem is usually in cash conversion and in the window dressing of operating income. These are the signals AI looks for in the income statement and cash flow statement.
What is judged in this group
Whether profit converts into cash, whether sales are collected, whether inventory turns, and whether the operating margin holds up without items unrelated to the business. Operating income is the only reliable judge of profitability.
How they are used
Each card has two parts: the reasoning (why it is a signal) and the detector (the formula, the threshold and where to look). Cifra's AI applies its own deterministic checks during the analysis and these cards let you replicate them by hand on the filing.
Red flags
Signals worth watching
From the most visible to the most subtle. All can be checked with data published in the report itself:
If operating income is negative, the business cannot sustain itself through its operations: it lives off unrelated items (asset sales, financial income, tax refunds) or accumulated cash from prior years. There are legitimate exceptions —pre-commercial biotechnology, deep restructurings— that the AI distinguishes before raising alarms.
How to detect it: Operating margin = operating income ÷ sales. Check whether the negative margin is one-off (a specific impairment for the period) or structural, and whether the result depends on recurring non-operating items.
02
REITs: property rotation to window-dress and hidden capex (Property trading to flatter FFO)
Maquillaje
In a REIT, buying and selling properties on a recurring basis can window-dress results: gains on sales inflate profit (which standard FFO excludes) and divestitures disguise the real outlay of maintaining the portfolio (tenant improvements, leasing costs, renewals). The cash that appears surplus has come out of the real estate equity.
How to detect it: Check that reported FFO does not include gains from sales, compare FFO with AFFO/CAD (which deducts maintenance capex) and review whether the pace of purchases and sales responds to the business or only to reported profit. AI shows reported FFO and AFFO/CAD when available.
03
Profit doesn't make it to cash (Earnings that do not convert to cash)
Cash
Accounting profit is recognized when accrued; cash comes in when the customer pays. If operating cash flow is systematically lower than net income, there may be expense capitalization, premature revenue recognition, or working capital that gets stuck.
How to detect it: Cash conversion = CFO ÷ net income, several fiscal years. Sustained below 1 requires reading revenue recognition, expense capitalization and working capital trends in the notes.
04
Receivables and inventories growing faster than sales (Receivables & inventory outpacing sales)
Current
Accounts receivable or inventories growing faster than sales indicate that sales are being made on credit or product is being stockpiled that isn't selling. Both paths end in impairments, markdowns and cash problems.
How to detect it: Days sales outstanding (DSO) = accounts receivable ÷ sales × 365. Days inventory outstanding (DIO) = inventory ÷ cost of sales × 365. Compare them with sales trends and with the same quarter of the prior year.
No signal is proof of fraud on its own: the value is in the accumulation and in the contrast with the sector and with the company's own history.
Red flags
Balance Sheet
Debt, Cash & Solvency
The balance sheet is what sustains the business in crises. The AI monitors debt against the cash the business generates, interest expense against profit, and commitments that do not appear on the face of the balance sheet.
What is judged in this group
Net debt versus EBITDA against each sector's benchmark, interest and dividend coverage, goodwill quality, and off-balance-sheet commitments (leases, guarantees, pensions, contingencies) with their maturities.
How they are used
Each card has two parts: the reasoning (why it is a signal) and the detector (the formula, the threshold and where to look). Cifra's AI applies its own deterministic checks during the analysis and these cards let you replicate them by hand on the filing.
Red flags
Signals worth watching
From the most visible to the most subtle. All can be checked with data published in the report itself:
01
Net debt above 3 times EBITDA (Net debt / EBITDA above 3x)
Solvency
When net debt exceeds 3 times EBITDA, any sales dip or rate hike turns debt service into the company's first expense. There are sectors with structural debt — regulated utilities, telecommunications, REITs — where the threshold is different: AI judges each model by its own yardstick.
How to detect it: Net debt = total debt − cash and short-term investments. EBITDA = operating income + D&A. The AI reconstructs both from the balance sheet and income statement, and also monitors interest coverage and the maturity schedule.
02
Interest eats up profit (and the dividend comes from debt) (Interest above 20% of EBIT & dividend funded with debt)
Coverage
Paying more than 20% of operating income in interest leaves the business no margin for unforeseen events: any drop in operating income wipes out the result. And if interest and dividends consume all free cash flow, the payout to shareholders is being financed with debt.
How to detect it: Calculate interest ÷ operating income (the 20% rule) and compare interest plus dividends against the period's free cash flow. The AI applies that rule in the income statement analysis.
03
Oversized goodwill and recurring impairments (Oversized goodwill & serial impairments)
Assets
Goodwill is the premium paid in past acquisitions. If it is enormous relative to equity and is quietly impaired every few years (the classic one-quarter big bath), acquisitions destroyed value and it is being recognized late and poorly.
How to detect it: Compare goodwill with assets and equity, and detect repeated or concentrated impairments in a single quarter. AI reverses goodwill impairment in the Adjusted column and explains it in a note.
04
Debt and commitments that are not visible (Off-balance commitments & maturity wall)
Off-balance
Leases (when the sector does not treat them as financial debt), guarantees, off-balance-sheet vehicles, pension obligations, and contingent litigation can hit cash without appearing on the first line. And cheap debt with concentrated maturities is a refinancing just around the corner.
How to detect it: Review the notes on commitments, contingencies and pensions, and the year-by-year maturity schedule up to five years with rates and coupons, which the AI shows in the annual analysis.
In the balance sheet lens for financials, the roles reverse: deposits are not debt-as-risk and provisions for credit losses are operating costs, not an adjustment.
AI analysis
Guides on Cifra's analysis engine, AI interpretation of SEC filings and sector analysis frameworks.
AI Audit · Form 10-Q
Quarterly Analysis (Form 10-Q)
Quarterly Report · Operational Pulse, Margins, and Two Horizons
The Form 10-Q it is the official financial report that U.S.-listed companies file with the SEC three times a year (at the close of Q1, Q2 and Q3). They are unaudited interim accounts by external firms, aimed at measuring the immediate pulse of the business: evolution of sales and margins, pricing power, real cash generation and discipline in the use of capital. Cifra processes official XBRL data and uses AI to audit the mathematical consistency between accounting results, cash flows and the balance sheet.
What We Do: The Last 3 Months and the Full Year
To avoid distortions caused by business seasonality, each report is analyzed in two parallel and independent horizons: "LAST 3 MONTHS" (the figures exclusive to the quarter, to capture acceleration, margin loss or the recent slowdown in volume) and "FOR THE WHOLE YEAR (YTD Cumulative)" (the 6- or 9-month figures, to see the annual trajectory against guidance). In Q1 the analysis is done over the single 3-month horizon. Each horizon is presented on its own page.
The 3 Parts of Each Analysis
Within each horizon, the report is divided into three parts: 1) Income Statement (sales, margins and normalized taxes), 2) Cash Flow (the real cash the business generates) and 3) Capital Allocation (where the cash came from and what it was spent on). A chain of 3 AI agents —origin, sector, and analyst— extracts the data from the SEC, applies the rules of the corresponding sector (consumer staples, technology, consumer discretionary, energy, materials, industrials, health care, utilities, communication services, real estate/REITs, or financials) and builds the final report.
Cifra Methodology
The 3 Parts of the Quarterly Analysis
Structure, formulas, accounting rules, and audit logic generated by AI for each quarter:
01
Income Statement (Income Statement & Normalized Profitability)
Operating Normalization
Audit the 5 canonical metrics: Sales (Revenue / Top-Line), Gross Profit, Operating Income (EBIT), EBT (Earnings before taxes) y Net Income (Bottom-Line), along with the per-share metrics at the bottom (shares outstanding y BPA / EPS). It is presented under a 6-column table: Adjusted, Prev. Adjusted, % Adjusted, Normal, Prev. Normal y % Normal. The column that matters is "Adjusted": it cleans up accounting noise so that the real business of one period can be compared against another.
1. Goodwill and intangible impairments (most important):
when a company records an impairment of brands, patents, or goodwill (such as Kraft Heinz's $1,428M in 2024 or Molson Coors's $3,919.6M in 2025), it is not a real expense or a cash outflow: it is the recognition that in the past too much was paid for something. The AI adds it back to Operating Income and to EBT in the column Adjusted:
Adjusted Operating Income = Normal Operating Income + Impairment. This is how the clean and recurring profitability of the business is compared year over year (*apples to apples*), without penalizing today's operations for a past overpayment error.
2. Taxes (the second key adjustment):
taxes may come out negative (a tax benefit, as in Molson Coors) or be distorted by credits, repatriations or one-off litigation. The normal thing for a healthy company is to pay taxes between 20% and 25%, so when the deviation exceeds the ±20 % the AI recalculates the tax by applying 23% directly to Adjusted EBT:
Adjusted Net Income = Adjusted EBT × 0.77. An explanatory note is added with adjusted EBT and reported taxes versus normalized taxes.
Real example — Income Statement (Molson Coors, 10-K 2025). In its 10-K, Molson Coors reported a pre-tax loss of 2,518M and taxes negative of $337.8M (a tax benefit). The adjustment is twofold: the 3,919.6M in impairments (operating income goes from −2,336.9M to 1,583.8M) and taxes are normalized at 23% of adjusted EBT (net income goes from −2,139.6M to 1,080M).
The official 10-K income statement: taxes came out negative (tax benefit of 337.8M).The same account already adjusted by Figure: impairments added back (operating from −2,336.9M to 1,583.8M) and taxes normalized at 23% (net from −2,139.6M to 1,080M).
02
Cash Flow and Free Cash Flow (Cash Flow, Working Capital & FCF)
Real Cash Generation
Evaluates the real conversion of accounting profits into liquid cash through 6 mandatory line items: Cash Flow (Operating), CAPEX (Capital Expenditure), FCF (Free Cash Flow = Cash Flow − CAPEX), FCF/Share, Dividend (paid in cash) y Free (Remainder = FCF − Dividend). It is presented in two comparative columns: Normal (WC=...) y Normalized*1 (WC=...).
The most important things in this part are three adjustments: the stock options (dilute shareholders even if no cash is involved), the taxes (what has actually been paid in cash versus what should be paid) and the WC or current (cash trapped in inventories and receivables).
How we obtain the "last 3 months" (Q2 and Q3):
SEC regulations only require publishing the cumulative cash flow statement (YTD: 6 months in Q2, 9 months in Q3). To offer the pure quarter perspective, the AI derives the cash flow exclusive to the 3 months by subtracting the cumulative reported in the prior quarter:
Quarterly Flow (Qn) = Cumulative Flow (Qn) − Cumulative Flow (Qn−1). This subtraction is applied to Cash Flow, CAPEX, FCF, Dividends and Free. As it is a standard arithmetic operation to isolate the period, it carries no asterisk notes. In Q1, the cumulative figure matches the 3 months and does not require subtraction.
1. Stock Options compensation (SBC):
in the cash flow statement the company add-back the stock-based compensation because "no cash has left the bank account." True, but those shares are granted at a discount relative to its real value and they are diluting us: each year new shares are issued that reduce our share of the business. Even though it is not an outflow of cash, it is an economic cost to the shareholder. That is why in the Normalized column removes the full amount of that line: by neutralizing the non-cash entry, the full cost of dilution to the shareholder is charged (the same adjustment we saw in the Financial Data section).
2. Taxes (cash paid vs. what was due):
the AI extracts taxes from the cash flow statement effectively paid in cash and compares them against normalized taxes at 23% of Adjusted EBT (those the company should having paid). If it underpaid, that difference is deducted from the Normalized column:
Tax adjustment = Cash taxes paid − (0.23 × Adjusted EBT). Note is added *2: Taxes with the calculation.
3. Working capital or WC (Working Capital):
working capital is the money the business has trapped to be able to operate. It is calculated with the three line items we already saw in the Financial Data guide: the accounts receivable (what customers owe us), the inventories (inventory stock) less accounts payable (what suppliers finance). If a business has 10,000M trapped (3,000M from customers + 8,000M inventory − 1,000M suppliers) and its prices and volumes grow 10%, it needs to tie up 1,000M more in cash just to run the same. The estimate applied by Cifra is:
WC = average of % (ΔWC / operating cash flow excluding ΔWC) over the last 10 years × operating cash flow excluding ΔWC for the period
Figure takes the last 10 fiscal years, calculates what average weight of working capital over operating cash flow excluding working capital (CFO − ΔWC) and applies that percentage to the period's cash flow:
In quarterly reports (10-Q) the annual theoretical figure is prorated: Q1 1/4, Q2 2/4 and Q3 3/4 (each standalone quarter, 1/4).
Important: this it is not an exact science; it is a proprietary estimation formula, invented by the author of Cifra, and not an accounting standard. It is not intended to be exact: it only serves to get an idea of how much should having spent (or released) the business in working capital in a normal year and having a reasonable benchmark against which to measure what the company reports.
The flow is adjusted by discounting the difference between reported and theoretical: Normalized Cash Flow = Normal Cash Flow − (WC_reported − WC_theoretical), recalculating FCF, FCF/Share and Free Capital.
Real example (KHC, 10-K 2025): the average of 10 fiscal years gave −6,1 %, a theoretical WC of −275M, compared to the −19M reported; that 256M deviation is subtracted in the Normalized column.
Real example — Cash Flow (Molson Coors, 10-K 2025). The best case to see tax adjustments in the cash flow statement:
Step 1 — Set taxes to zero: the cash flow statement has a line that neutralizes the tax so that cash flow does not depend on an accounting entry. In 2025 the income statement taxes came out negative (a tax benefit of 337.8M), so that line removes 337.8M from net income; in 2024, when they were an expense, the same line added back +345.3M.
Step 2 — Remove taxes actually paid: the line «Income tax (paid) received» subtract the cash paid for taxes: 131,4M en 2025.
Step 3 — Compare with the normalized figure: the Income Statement block already calculated that it should have paid 322,6M (23% of Adjusted EBT of 1402.7M). Since it only paid 131.4M, it has paid 322.6 − 131.4 = 191.2M less de lo que le correspondía: esa cantidad se le quita al flujo de operaciones (1943,2M → 1752M antes de CAPEX).
Official 10-K cash flow statement: the line that reconciles taxes to zero (337.8M) and what was actually paid in cash (131.4M).
03
Capital Allocation (Capital Allocation & Balance Sheet Reconciliation)
Asset Control
Answers the fundamental investor question: "Where did the money come from this quarter and what exactly was it spent on?" The table must start with the row Free resulting from the Cash Flow Block (FCF - Dividends) and reconciles equity movements calculated directly from the official quarterly SEC balance sheets.
Calculation of Changes Directly from the Quarterly Balance Sheet:
Cash Balance Sheet:ΔCash = -(Current cash - Prior cash). If cash increases, it is a use of capital (-); if it decreases, it acts as a source of liquidity (+). It always matches the change in balance sheet balances.
Debt Balance:ΔDebt = Current debt - Prior debt (Long term + Short term financial; excludes suppliers). If debt rises, borrowed money comes in (+ source); if it is repaid, money goes out (- use).
Short-term investments: Purchase of marketable securities (- use) or liquidation (+ source).
Share buybacks: Outflow for purchase of treasury shares (- use).
Acquisitions (M&A): Purchase of businesses or brands (- use, materiality filter ≥ 50M).
Divestitures: Revenue from the sale of brands, subsidiaries, or assets (+ source, materiality filter ≥ 50M).
Equity financing: Issuance of preferred shares or sale of minority stakes (+ source, ≥ 50M).
Assumed debt (non-cash): Negative adjustment (-) when pre-existing debt of an acquired business is assumed without any cash coming in.
Movements that do not go through cash: Restricted cash/escrow and non-cash debt are not shown as rows (the table only includes cash movements). If the reconciliation does not close, the report explains them below the table with their exact amount (see below), even if the gap falls within the reasonable margin.
Gaps that are not gaps: restricted cash and non-cash debt.
There are movements that change the balance sheet without being cash inflows or outflows: the restricted cash (money held in escrow, collateral or deposits, which only changes drawer) and the non-cash debt (debt that disappears or appears without being paid in cash). The Capital Allocation table only includes cash movements, so these cases stay out and, when the reconciliation does not close, the report explains them below the table with their exact amount and the remaining gap (even if the gap falls within the reasonable margin). Only if there are no movements of this type is nothing added.
Example (non-cash debt): the company has bonds recorded on the balance sheet at 1.000M. Interest rates rise and those bonds (with an old coupon) become worth 800M in the market. The company repurchases them paying 800M and the 1,000M obligation disappears: debt falls 1,000M, cash falls 800M and 200M cost nothing (gain on debt extinguishment).
Free 0 · Debt -1,000 · Cash +800 · Total -200 → the report warns: “Does not reconcile: -200M remain”.
It explains it below the table: “The following do not go through cash and explain the gap: non-cash debt (early debt repurchases or repayments at a gain or loss, foreign exchange) +200M. Without them, the remaining gap would be 0M, within the reasonable margin.”
If rates fall and the bond trades above (1,100M), repurchasing it costs more than its book value: the non-cash debt would be negative and it is also explained the same way.
Real example: in the 10-Q of Kraft Heinz (Q2 FY2026) balance sheet debt fell 2,132M, but the cash flow statement only reflects 1,829M of debt movements. The 303M difference —gain on early extinguishment reported in the report itself (“Loss/(gain) on extinguishment of debt”) plus foreign exchange— is explained below the table. And in the 10-Q of PepsiCo (2018) the escrow of 1,997M from the SodaStream purchase (restricted cash) is another typical case: the money was not spent, it was only held in escrow.
«Total» Sum Rule and Double Analytical Verdict:
The algebraic sum is calculated with sign: Total = Free + Σ Sources/Uses.
Reasonable reconciliation: Si |Total| ≤ max(50M, 20% of Free, 10% of gross sum), the AI issues: "It roughly checks out. Even so, there may be a detail I missed." (o "The result checks out." si es 0).
Significant discrepancy: If it exceeds said threshold: "It doesn't check out. There is a significant discrepancy between free capital and detected uses; it should be analyzed further."
To mark it as "doesn't add up" it does not necessarily mean that the AI did it wrong: it is usually money being “lost” along the way that does not appear in the detected items. When the system knows the exact cause (restricted cash, non-cash debt), the verification itself explains it below the table with the amount. For the rest, it is worth investigating where it is going: deposits in escrow, litigation, financial derivatives, partial acquisitions or other items of "other" that the balance sheet does not clearly break down.
Real example — Capital Allocation (Molson Coors, 10-K 2025). This is what the analysis has done: the reconciliation does not balance (Total 263,3M) and issues the "Does not balance" warning.
To investigate it, we go to 10-K and we find the cash flow statement and the balance sheet:
Cash flow statement from the 2025 10-K: dividends paid 376.3M and share buybacks 647.9M.10-K balance sheet: cash falls from 969.3M to 896.5M (−72.8M) and debt rises from 6,146.1M to 6,299.5M (+153.4M).
On the balance sheet, the cash low 72.8M (source of liquidity, +) and the debt increases $153.4M (source, +), but when going to the debt lines of the cash flow statement there is no indication that debt has increased: there are only payments of 12.8M and no inflows ("Proceeds on debt and borrowings —"). In addition, there are "other" lines (other assets) that increase by about 120M and it is not clear what they correspond to. That money that 'gets lost' along the way is what explains the discrepancy: it is not an AI error, it is information that the balance sheet does not clearly break down.
The debt lines of the cash flow statement: only payments of 12.8M and no debt inflows in 2025.
Still, broadly speaking the destination of the money is clear: all free cash flow has been spent on dividends (376.3M) and buybacks (647.9M).
Annual Report · Audited Accounts, In-Depth Investigation, and Multi-Year Projection
The Form 10-K it is the definitive and comprehensive annual report that companies file with the SEC. Unlike the quarterly one, it is entirely audited by independent firms, it includes hundreds of pages of contractual notes, debt agreements, executive compensation and the company's strategic plan. At Cifra it is analyzed in two distinct parts.
Part 1: Exactly the Same as the Quarterly, but with the Full Year
The first part is identical to that of quarterly reports: the same Income Statement, Cash Flow and Capital Allocation blocks, with the same adjustments (goodwill and intangible impairments, taxes normalized at 23%, stock options and WC). The only difference is the single 12-month horizon: the full year, without breaking it down into quarters.
The 10-K allows going far beyond the operational pulse: specific sections on share buybacks (with a 5-year projection), the debt maturity schedule (which normally only appears in the annual report), the changes in senior management, the acquisitions and divestitures, the dividend evolution, the official guidance and the Final Results Score (from 1 to 10).
Exclusive Deep Audit of the 10-K
The In-Depth Inquiry Sections of the Annual Report
Strategic information found only in the 10-K that Cifra analyzes with AI:
01
Share Buybacks and 5-Year Projection (Share Repurchases & Outlook)
Return to Shareholder
The AI audits the track record of the last 3 to 5 years: total amount invested, shares retired and the weighted average price paid per share. In addition, locate in the notes the remaining authorization balance approved by the board of directors.
5-Year Mathematical Projection: With the remaining authorization and the average price paid, the AI calculates buyback capacity: how many shares can be retired per year, what percentage will reduce share capital, and how much it will annually boost Earnings Per Share (EPS) mathematically.
Real example (TAP, 10-K 2025): in 2025 bought back 12.9M shares for $658.1M at an average price of $51.0 (2024: 10.9M shares for $645.2M at $59.2; 2023: 3.5M for $212.7M at $61.6). Remained ~$2,560M authorization valid until December 2031. Shares outstanding fell 4.7% during the year (from 208.9M to 199.1M) and boosted EPS by +4.9%. Projection: ~10.0M shares retired per year (~5.0% of capital), EPS +5.3% annually.
The buybacks section of the analysis, with the share evolution, the projection and the official 10-K excerpt.
02
Debt, Capital Structure and Maturities (Debt Maturity Schedule)
Multi-Year Solvency
Comprehensive diagnosis of the outstanding debt structure: 10-year historical evolution of Total Debt and Net Debt, weighted average interest rate of all debt, and detection of executed refinancings.
Contractual schedule year by year (Next 5 Years):
the maturity schedule it is information that normally only appears in the 10-K (in the debt notes), so the annual report is the occasion to know exactly when payment or refinancing is due. The AI extracts the exact amount maturing in each of the next 5 fiscal years and the coupon interest rate of each bond or issuance. If there was a refinancing during the year, calculate its exact impact on EPS in dollars per share.
Real example (TAP, 10-K 2025): net debt of $5,403M (+$226.2M vs 2024) and gross debt of $6,299.5M, with an average interest rate of 3.35%. The official schedule is highly concentrated: 2.424,7M$ vencen en 2026 and practically nothing in 2027-2030 (0.5M / 0.5M / 1.7M / 0.5M), leaving $3,841.6M for after 2030 (total $6,269.5M, excluding finance leases).
The maturities schedule as seen by the analysis: commitments concentrated in 2026 and average debt interest rate.The evolution of debt (normal vs net) in the analysis, with net debt at 5,403M$ in 2025.
03
Changes in Senior Management (Executive Changes)
Corporate Governance
If there have been first-level changes during the fiscal year (CEO, CFO, COO, or Board Chair), the AI activates an exhaustive management audit.
What the AI investigates:
• Outgoing executive: How much sales and margins grew during their tenure, where they are moving to, and what policies they implemented.
• Incoming executive: Their proven track record at previous companies with dates and metrics, and the strategic priorities they have publicly announced.
Real example (TAP, 10-K 2025): on September 19, 2025, the succession was announced: Rahul Goyal assumed as CEO on October 1, 2025, replacing Gavin D. K. Hattersley, who retired after leading the company since 2019 and remained as an advisor until December 31, 2025.
The management changes section of the analysis: outgoing and incoming with their data.
04
Acquisitions and Divestitures (M&A, Divestitures & Restructuring)
Strategic Moves
Detailed account of all corporate transactions executed during the year: company acquisitions, sale of brands or subsidiaries, spin-offs, and cost restructuring plans.
Economic rationale audit: The AI analyzes what was acquired, why (stated strategic rationale), financial payment terms, size of the acquired business and real synergies expected versus the risk of future impairment.
Real example (TAP, 10-K 2025): acquisition of Fevertree USA, Inc. (exclusive rights to import, produce, market and distribute Fever-Tree products in the U.S.) for $22.3M in cash; divestitures of 15,8M$ (sale of assets) and the Americas Restructuring Plan (35M$ expected, of which 28.7M$ were already recognized in 2025).
The corporate operations section of the analysis, with the restructuring plan and its charges.
05
Dividend Evolution (Dividend History & Sustainability)
Direct Remuneration
The AI reconstructs the dividend history of recent years: total amount distributed, dividend per share, annual and cumulative growth (CAGR) and its real coverage (payout on adjusted EPS and on Free Cash Flow, using the line Free).
Sustainability test: the dividend must be comfortably covered by the FCF (reasonable reference: Dividendos / FCF < 60-70 %). A dividend that grows faster than profit and cash flow ends up being financed with debt or accumulated cash, and the row Free of Capital Allocation is the first to warn about it.
Real example (TAP, 10-K 2025): dividend per share of $0.68 (2021) → $1.52 (2022) → $1.64 (2023) → $1.76 (2024) → 1,88$ (2025), a +6.8% in the last year (per-share CAGR of +28.9% since 2021). The total payment for 2025 was 376,3M$, comfortably covered by an FCF of $1,067.8M and with a payout on Adjusted EPS of 34,7 %.
The dividends section of the analysis: evolution and payout over the last 5 years with the annual table.
06
Official Forecasts for Next Year (Guidance & Outlook)
Quantitative Projection
Analysis of the official targets and forecasts communicated by management for the new fiscal year: organic sales growth at constant currency, underlying EBT, diluted EPS, expected FCF, and budgeted CAPEX.
Projection table in real monetary figures: The AI prohibits leaving ambiguous terms such as "Flat" or simple percentages. For each metric, it mandatorily calculates the projected monetary figure in millions of dollars (ej. Flat ±1% in sales → ~$11,030M – $11,252M), directly compared against the figure achieved the prior year.
Real example (TAP, 10-K 2025): 2026 guidance for sales at constant currency flat ±1% (~$11,030–11,252M vs. $11,141M in 2025), underlying EBT −15%/−18% (~$1,150–1,192M), diluted EPS −11%/−15% (~$4.93–5.16), underlying FCF $1,100M ±10% and CAPEX $650M ±5%.
The outlook section of the analysis: each guidance target converted to a projected monetary figure.
07
Results Score from 1 to 10 (Annual Performance Score)
Cifra Rating
Each annual report culminates with a numeric rating from 1 to 10 accompanied by a concise analytical rationale. It is a score purely financial data: it is calculated exclusively on what the year's accounts reflect (sales, margins, cash conversion, debt and capital allocation) and the quantitative targets set out in the official outlook. It is not questioned whether the outlook will be met or not, nor are news, rumors or risks assessed: all of that is outside the score and it is the investor who must judge it.
Strict no-speculation rule: The score is based exclusively on verifiable accounting facts and figures: the quality of sales and closed margins, conversion into Free Cash Flow, debt leverage and the realism of the guidance targets. The AI is strictly prohibited from speculating on whether management "will or will not deliver" in the future.
Real example (TAP, 10-K 2025): the analysis score was a 3/10, with the express clarification that it is a purely financial rating based on the year's accounts, the official outlook and the capital allocation executed, without speculation about future performance.
