Standardized quarterly financial abnormal change factor
factor.formula
Standardized quarterly financial abnormal change factor (F):
Normal Growth Multiplier (GrowthFactor):
in:
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Indicates the financial indicator value of the current quarter (q). This indicator can be taken as: inventory, receivables (the sum of accounts receivable, prepayments, other receivables, and advances), sales and management expenses (sales expenses, management expenses, gross profit). When calculated separately, derivative indicators such as abnormal inventory, abnormal receivables, abnormal sales and management expenses, and abnormal gross profit can be obtained. Note: Advances and gross profits need to be negative when calculated to reflect the financial risks when these items grow abnormally.
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Represents the financial indicator value of the same quarter of the previous year (q-4). It is consistent with the definition of $F_{q}$ and is also determined based on the selected financial account.
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It represents the growth factor of cash received from sales of goods and provision of services in the current quarter relative to the same quarter of the previous year, and is used to measure the normal business growth level.
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Represents the cash received from the sale of goods and provision of services in the current quarter.
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Represents cash received from sales of goods and rendering of services in the same quarter of the previous year.
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Represents total assets at the end of the quarter. Normalized using total assets to eliminate differences between companies of different sizes.
factor.explanation
This factor evaluates the robustness of a company's financial position by calculating the degree of deviation of the current financial items from their historical normal growth level. Specifically, the formula first calculates the difference between the current financial indicator value and the expected value based on the level of the previous year and the normal growth rate estimate, then divides it by the current total assets for standardization, and multiplies it by -1 to make it positively correlated with financial risk, that is, the larger the value, the higher the financial risk. If the change in a company's financial items in a certain quarter is significantly greater than its historical normal level, it means that the company may have operating abnormalities or financial risks, such as inventory backlogs, a surge in accounts receivable, and out-of-control costs and expenses. This factor recommends caution with stocks with standardized scores less than two standard deviations, as these companies may have obvious financial anomalies. It should be noted that abnormal increases in prepayments and abnormal increases in gross profit will be regarded as negative signals by us, because this is likely to indicate that the company has falsified its financial statements by recognizing revenue in advance or inflating profits.