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.
Sector currently available: Currently, companies from defensive consumer (Consumer Staples). The AI audits organic volume vs. price/mix (pricing power), sensitivity to raw materials and packaging, actual conversion into free cash flow (FCF) and dividend sustainability.
Expansion into new sectors: In the future I am working so that companies from different sectors (technology, retail, industrials, healthcare, etc.) can be analyzed, adjusting the prompts and methodology to the operating reality of each industry.
Usage Limits and Shared Analyses
Daily RateUp to 3 analyses per day
Currently, each user has up to 3 AI analyses per day to request new reports that have not been previously analyzed.
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.
Beta Phase · 100% Free
Project in Beta Phase and Support via Donations
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 and the conservative adjustment (+20%): 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 adjust and even add 20% on top of what appears on that line (or deduct it directly from Free Cash Flow) to impute the real economic cost borne by the shareholder for 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.
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 defensive consumption rules 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 Adjusted*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 securities are issued that reduce our share of the business. Although it is not an outflow of cash, it is an economic cost to the shareholder. That is why in the Adjusted column we removes 120% of the value of that line: 100% to neutralize the non-monetary entry and a 20% additional as a conservative cost of dilution (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 Adjusted 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). The Nike example made it clear: 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 work the same. That is exactly what this formula estimates:
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: Adjusted Cash Flow = Normal Cash Flow − (WC_reported − WC_theoretical), recalculating FCF, FCF/Share and Free Capital.
Real example (KHC 2026 Q2): the formula gave −8,4M for the quarter, but the company reported +115M de liberación de circulante; esa desviación de 123,4M se resta en la columna Ajustado (1082M → 958,6M).
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 at 120% 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.
