Auditor Watch

Edgarette reads a company the way an actuary reports, not the way a stock screen sorts. The order is fixed (ASOP No. 41, 25 and 23), and each step can move the one after it.

1 · Exposure. How big the thing being measured is: revenue, total debt, cash, as filed.

2 · Experience. What actually happened: revenue on the year and across the record, operating margin and its direction, then soundness — equity against assets, return on equity, payout against profit, and whether the dividend per share rose or was cut.

3 · Credibility. How much weight that record deserves. More audited years, more weight. If a company has filed 8-K Item 4.02, saying earlier statements should no longer be relied on, the weight is marked down one step until a fresh annual report lands. The figures do not change; what changes is how much they are allowed to carry.

4 · The range. An 80% band for next year’s revenue, set from 19,928 SEC company-years of how firms of that size actually turned out (method v4.1). Across seven years of outcomes, 2019–2025, 69.0% landed inside it and 81.9% inside the wider stress band; in 2025, the one year the method never saw, 83.4%. Every range is logged and scored when the next annual report arrives.

5 · Cautions. Restatements, acquisitions, disposals and a changed fiscal year all move figures that look comparable and are not.

What is left out, and why. Dividend yield, price/earnings and price/book need a share price; these boards carry filings only, so they are not shown rather than guessed. Chart patterns are not read here at all. And no card makes a trading recommendation: adjusting a conclusion for credibility is reporting, a verdict would be advice.