Risk models and red flags

Transcript

Risk models and red flags. In this guide: the risk panel, what each model measures, red flags and alerts, and the Risk Monitor.

On a company's research page, the Fundamental Quality and Risk panel runs academic risk models on the company's filed annual statements. Same inputs, same output. And as the panel says, it is not a rating, a recommendation or advice.

Altman Z and Ohlson O estimate bankruptcy and default risk from balance-sheet and earnings ratios. Merton distance to default measures how far the value of the company's assets sits above its debt. CHS estimates the chance of failure within twelve months.

Piotroski F runs nine yes-or-no tests of whether profitability, leverage and efficiency improved. Economic profit compares the return on invested capital with the cost of capital. And Beneish M tests earnings quality; fast growth can trip it, which is not evidence of wrongdoing.

Each chip shows the score and its band. Under the panel, a link opens the company's annual reports on SEC EDGAR.

When a model crosses its documented threshold, the panel lists it as a red flag. Here, none is triggered. Models that do not apply, such as bankruptcy models on banks and insurers, abstain rather than score.

Alerts for the company notify you when an event is recorded, such as an earnings day or an insider cluster buy.

Under Analyze, Risk Monitor scores NASDAQ delisting risk on four pillars: float concentration, promotional language in press releases, jurisdiction, and shell or reverse-merger flags.

Quick scan scores a preset ticker in one click, and missing share counts are fetched automatically. Why this score lists the evidence behind each pillar.

And the disclaimer is plain: the score is a model output from public data, not a prediction or a statement of fact.

Start your research at quintarthai.com. Next in this path: earnings and filings. This video is general information, not investment advice.