@v587d/capital-generation 2.7.11 → 2.8.0

package/selected-skills/InvestSkill/plugins/us-stock-analysis/skills/financial-report-analyst/references/11-phase-3-financial-statement.md

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+# Step-by-Step Analysis Framework(continued)
+
+Part 2 of 4 for `financial-report-analyst` — Step-by-Step Analysis Framework
+See `SKILL.md` for what to read and when; this part is procedure, not routing.
+
+### Phase 3: Financial Statement Deep Dive
+
+**3.1 Income Statement Quality Assessment**
+
+```
+Line Item Analysis:
+                    Current    Prior    Change    Quality Note
+Revenue             $          $        %
+COGS                $          $        %
+Gross Profit        $          %GP
+R&D                 $          %Rev
+S&M                 $          %Rev
+G&A                 $          %Rev
+Operating Income    $          %OM
+Interest Expense    $          $
+Tax Rate            %          %
+Net Income (GAAP)   $
+EPS (GAAP)          $
+Non-GAAP EPS        $         Reconciliation items: ___
+```
+
+Quality checks:
+- **Revenue recognition policy**: Has it changed? Check footnotes for ASC 606 adoption details
+- **Channel stuffing signals**: Receivables growing faster than revenue (days sales outstanding expanding)
+- **Deferred revenue**: Growing (positive — customers paying ahead) or shrinking (negative)
+- **Tax rate**: Unusually low tax rate often driven by one-time benefits; normalize for comparison
+
+**3.2 Balance Sheet Analysis**
+
+```
+Balance Sheet Health Check:
+Asset Quality:
+  Cash & Equivalents:         $___  (% of total assets)
+  Accounts Receivable:        $___  DSO: ___ days  (vs. prior: ___)
+  Inventory:                  $___  DIO: ___ days  (vs. prior: ___)
+  Goodwill & Intangibles:     $___  (% of total assets) — impairment risk?
+  Other Long-Term Assets:     $___
+
+Liability Structure:
+  Short-Term Debt:            $___  (due within 12 months)
+  Long-Term Debt:             $___
+  Total Debt:                 $___
+  Net Debt/(Cash):            $___
+  Interest Coverage Ratio:    ___x  (EBIT / Interest Expense)
+  Debt/EBITDA:                ___x
+
+Equity Quality:
+  Retained Earnings Trend:    Growing / Declining / Negative
+  Treasury Stock:             $___  (buyback history)
+  AOCI:                       $___  (pension obligations, FX hedges)
+```
+
+Balance sheet red flags:
+- Goodwill > 30% of total assets without clear acquisition rationale
+- Accounts receivable growing 2x+ faster than revenue (aggressive recognition)
+- Inventory build in a demand-softening environment
+- Off-balance sheet operating lease obligations (check footnotes — ASC 842)
+- Underfunded pension liabilities buried in AOCI
+
+**3.3 Cash Flow Statement — The Truth Teller**
+
+The cash flow statement is the hardest to manipulate. Always reconcile GAAP net income to operating cash flow:
+
+```
+Cash Flow Quality Analysis:
+Operating Cash Flow:          $___
+Less: Capex:                  $___
+Free Cash Flow:               $___  FCF Margin: __%
+FCF Conversion Rate:          ___   (FCF / Net Income — should be >80% for quality businesses)
+
+Working Capital Changes:
+  AR Change (use/source):     $___
+  Inventory Change:           $___
+  AP Change:                  $___
+  Deferred Revenue Change:    $___
+  Net Working Capital Impact: $___
+
+SBC Add-Back:                 $___  (% of Revenue — >5% is dilutive)
+D&A Add-Back:                 $___  (% of Revenue — maintenance capex proxy)
+```
+
+Cash flow quality flags:
+- FCF significantly below net income (earnings quality problem)
+- Large working capital builds consuming cash (inventory/AR growth)
+- SBC >5% of revenue — real dilution not reflected in GAAP net income
+- Capex below depreciation for multiple years (under-investment in assets)
+
+---
+
+### Phase 4: Risk Factors Analysis
+
+The Risk Factors section (Item 1A in 10-K) is legally required to disclose material risks. Read for:
+
+**4.1 New vs. Removed Risk Factors**
+
+Compare current filing's risk factors against the prior period:
+
+```
+Risk Factor Changes:
+NEW Risks Added (first appearance):
+  1. [Risk title] — [Category: Business/Regulatory/Macro/Competition/Cyber/Legal]
+  2. ...
+
+REMOVED Risks (previously disclosed, now gone):
+  1. [What was removed] — [Why might this be significant?]
+
+ELEVATED Risks (same risk, but expanded disclosure or moved higher in list):
+  1. [Risk title] — [What changed in the language]
+```
+
+Risk categories to flag as highest priority:
+- **Regulatory/Legal**: New government investigations, pending litigation, regulatory changes
+- **Customer Concentration**: Single customer >10% of revenue disclosed
+- **Technology/Competition**: Specific competitor named as existential threat
+- **Going Concern**: Doubt about ability to continue as a going concern (immediate red flag)
+- **Debt Covenant**: Risk of violating debt covenants disclosed
+- **Cybersecurity**: New material cyber incident disclosures (Item 1.05 of 8-K)
+
+**4.2 Litigation and Legal Proceedings**
+
+From footnotes and Item 3 (Legal Proceedings):
+- Active lawsuits with >$X million exposure
+- SEC or DOJ investigations
+- Tax disputes and uncertain tax positions
+- Environmental liabilities
+- Patent litigation (key for tech and pharma)
+
+---
+
+### Phase 5: Accounting Policy and Footnote Analysis
+
+Footnotes contain what management would prefer investors not to focus on.
+
+**5.1 Critical Accounting Estimates**
+
+Management must disclose "critical accounting estimates" — areas where judgment most affects reported results:
+
+```
+Critical Estimate Review:
+  Revenue Recognition:   [Policy and any changes]
+  Goodwill Impairment:   [Testing methodology, headroom]
+  Stock-Based Comp:      [Fair value models, assumptions]
+  Deferred Tax Assets:   [Valuation allowance — any new allowances = warning]
+  Contingent Liabilities: [What is and isn't accrued]
+  Pension/OPEB:          [Return assumption, discount rate]
+```
+
+**5.2 Related Party Transactions**
+
+Any transactions between the company and executives, board members, or major shareholders. These require heightened scrutiny for potential conflicts of interest.
+
+**5.3 Segment Reporting**
+
+When companies add or remove reporting segments, investigate:
+- Was a previously disclosed segment merged with another? (Often hides underperformance)
+- Were goodwill allocations shifted between segments? (Can delay impairment)
+- New segment disclosures can reveal previously hidden growth drivers
+
+---
+
+
+This section is not finished here: `Step-by-Step Analysis Framework` continues in `references/12-phase-6-management-tone.md`.

package/selected-skills/InvestSkill/plugins/us-stock-analysis/skills/financial-report-analyst/references/12-phase-6-management-tone.md

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+# Step-by-Step Analysis Framework(continued)
+
+Part 3 of 4 for `financial-report-analyst` — Step-by-Step Analysis Framework; Output Format; Input Formats Accepted; Standard Signal Output
+See `SKILL.md` for what to read and when; this part is procedure, not routing.
+
+### Phase 6: Management Tone and Language Analysis
+
+Apply natural language analysis to management's own words:
+
+**6.1 Tone Scoring**
+
+Rate management's tone across key sections:
+
+```
+Tone Assessment:
+Section              Tone Score (1=Very Negative → 5=Very Positive)    Key Language
+──────────────────────────────────────────────────────────────────────────────────
+MD&A Overview
+Revenue Discussion
+Margin Discussion
+Guidance Language
+Risk Factors Framing
+CEO Letter (if present)
+──────────────────────────────────────────────────────────────────────────────────
+Overall Tone:        [Score] / 5
+Change vs. Prior:    More Positive / Same / More Negative
+```
+
+**6.2 Hedging Language Flags**
+
+Flag specific hedging phrases that indicate uncertainty:
+- "We believe" / "we expect" / "we anticipate" — standard forward-looking
+- "We cannot assure" / "there can be no assurance" — heightened uncertainty
+- "Significant uncertainty" / "material uncertainty" — near-crisis language
+- Passive voice for negative news ("challenges were experienced") vs. active voice for positives
+- Increasing use of "headwinds," "challenging environment," "softness"
+
+**6.3 Management Credibility Tracking**
+
+```
+Guidance Accuracy Scorecard (prior 4 quarters):
+Period    Revenue Guidance    Actual    Beat/Miss    Margin Guidance    Actual    Beat/Miss
+Q-4
+Q-3
+Q-2
+Q-1
+──────────────────────────────────────────────────────────────────────────────────────────
+Batting Average: ___  Beat Rate: ___  Avg. Miss: ___
+```
+
+---
+
+### Phase 7: Year-over-Year Comparison (for Quarterly Reports)
+
+For 10-Q analysis, compare against the same quarter prior year AND the sequential prior quarter:
+
+```
+YoY and Sequential Comparison:
+Metric          Current Q    Prior Q (seq)    Prior Year Q    YoY %    QoQ %
+Revenue
+Gross Margin
+Operating Income
+EPS (GAAP)
+FCF
+```
+
+Identify if trends are:
+- Accelerating (sequential improvement + YoY beats)
+- Stable (sequential flat, YoY in-line)
+- Decelerating (sequential miss, YoY still positive)
+- Deteriorating (both sequential and YoY misses)
+
+---
+
+### Phase 8: Insider Activity (from Proxy/Form 4 Data)
+
+Cross-reference with available SEC Form 4 data around the filing date:
+- CEO/CFO buying on the open market (strong signal — insiders rarely buy for tax purposes)
+- Bulk insider selling at prices below historical averages (negative signal)
+- New 10b5-1 plan adoptions (scheduled selling — less informative than open market)
+- Executive departures disclosed in proxy or 8-K (CFO exits especially significant)
+
+---
+
+## Output Format
+
+### Executive Summary (1-2 paragraphs)
+
+High-level verdict on the filing quality and key takeaways for investors. Address: Is this a better or worse filing than prior periods? What is the single most important thing an investor should take away?
+
+### Financial Health Dashboard
+
+```
+┌─────────────────────────────────────────────────────────────────┐
+│  FINANCIAL REPORT ANALYSIS — [TICKER] [Filing Type] [Period]   │
+├────────────────────────┬────────────────────────────────────────┤
+│ Revenue Growth         │ [%] YoY   [Organic vs. Acquired]       │
+│ Gross Margin           │ [%]  (vs. prior: [%]  Δ [bps])         │
+│ Operating Margin       │ [%]  (vs. prior: [%]  Δ [bps])         │
+│ FCF Margin             │ [%]  (FCF Conversion: [%])              │
+│ Net Debt / (Cash)      │ $[M]  (Debt/EBITDA: [x])               │
+│ DSO                    │ [days]  (vs. prior: [days])             │
+│ Management Tone        │ [Positive / Neutral / Cautious]         │
+├────────────────────────┼────────────────────────────────────────┤
+│ Filing Quality Score   │ [Score] / 10                           │
+│ Earnings Quality Score │ [Score] / 10                           │
+│ Balance Sheet Score    │ [Score] / 10                           │
+└────────────────────────┴────────────────────────────────────────┘
+```
+
+### Key Insights (Bulleted)
+
+**Positives (Bullish Signals):**
+- [Specific insight with page/section reference from filing]
+
+**Negatives (Bearish Signals):**
+- [Specific insight with page/section reference from filing]
+
+**Neutral / Watch Items:**
+- [Items requiring monitoring but not yet actionable]
+
+### Red Flags and Anomalies
+
+| # | Red Flag | Severity | Where Found | Implication |
+|---|----------|----------|-------------|-------------|
+| 1 | | HIGH/MED/LOW | | |
+
+### Accounting Quality Score
+
+| Criterion | Score (0–3) | Notes |
+|-----------|-------------|-------|
+| Revenue recognition clarity | | |
+| Non-GAAP reconciliation quality | | |
+| FCF conversion rate | | |
+| Working capital trends | | |
+| Footnote transparency | | |
+| Auditor opinion | | |
+| Related party transactions | | |
+| **Total** | **/21** | |
+
+Score guide: 18–21 = High quality | 12–17 = Average | <12 = Scrutinize further
+
+---
+
+## Input Formats Accepted
+
+```bash
+# Paste raw text from 10-K or 10-Q sections
+/financial-report-analyst [paste filing text]
+
+# Analyze specific section of a recent filing
+/financial-report-analyst AAPL 10-K --section md&a
+/financial-report-analyst MSFT 10-Q --section risk-factors
+/financial-report-analyst NVDA 10-K --section cash-flow
+
+# Full report analysis (all sections)
+/financial-report-analyst GOOGL 10-K --full
+
+# Compare current vs prior filing
+/financial-report-analyst META 10-K --compare-prior
+
+# Quick earnings press release analysis
+/financial-report-analyst AMZN --press-release [paste text]
+
+# Proxy statement analysis
+/financial-report-analyst TSLA --proxy
+```
+
+---
+
+## Standard Signal Output
+
+All analysis concludes with this standardized block:
+
+```
+

package/selected-skills/InvestSkill/plugins/us-stock-analysis/skills/financial-report-analyst/references/13-thesis-invalidation.md

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+# Thesis Invalidation
+
+Part 4 of 4 for `financial-report-analyst` — Thesis Invalidation
+See `SKILL.md` for what to read and when; this part is procedure, not routing.
+
+## Thesis Invalidation
+
+After delivering the analysis signal, specify what would reverse it:
+
+**If signal is BULLISH — thesis breaks if:**
+- auditor issues going concern warning OR material restatement announced
+- [One or two more triggers drawn from this analysis's own drivers, each with a threshold]
+
+**If signal is BEARISH — thesis breaks if:**
+- new auditor clears all concerns AND restatement resolved favorably
+- [One or two more triggers drawn from this analysis's own drivers, each with a threshold]
+
+**Re-run this analysis when:**
+- [ ] Next earnings release
+- [ ] Price moves ±15% from current level
+- [ ] 60 days have elapsed
+- [ ] Material news event (acquisition, leadership change, regulatory decision)
+
+╔══════════════════════════════════════════════╗
+║              INVESTMENT SIGNAL               ║
+╠══════════════════════════════════════════════╣
+║ Signal:      BULLISH / NEUTRAL / BEARISH     ║
+║ Confidence:  HIGH / MEDIUM / LOW             ║
+║ Horizon:     SHORT / MEDIUM / LONG-TERM      ║
+║ Score:       X.X / 10                        ║
+╠══════════════════════════════════════════════╣
+║ Action:      BUY / HOLD / SELL               ║
+║ Conviction:  STRONG / MODERATE / WEAK        ║
+╚══════════════════════════════════════════════╝
+```
+
+Score Guide: 8.0–10.0 Strongly Bullish | 6.0–7.9 Moderately Bullish | 4.0–5.9 Neutral | 2.0–3.9 Moderately Bearish | 0.0–1.9 Strongly Bearish
+Confidence: HIGH (strong data, clear signals) | MEDIUM (mixed signals) | LOW (limited data, conflicting signals)
+Horizon: SHORT-TERM (1 week–3 months) | MEDIUM-TERM (3 months–1 year) | LONG-TERM (1+ years)
+
+**Disclaimer:** Educational analysis only. Not financial advice.
+
+