Red Flags

1. Receivables as (%) of Revenue:

Growth of (%): Receivables vs. Revenue:

Receiv
ables
Table

Revenue

2. Sales Growth:
Year
1

Year
2

Year
3

Year
4

Year
5

Year
6

Year
7

Year
8

Year
9

Year
10

Sales ($)
Sales Growth
(%)
Highest:
Lowest:
Typical Company in the Industry:
Sales or Revenue Growth (%);
Average. M. Capitalization: Revenue ($);
Average Time till Size (Years);
Year
1

Year
2

Year
3

Year
4

Year
5

Year
6

Year
7

Year
8

Year
9

Year
10

Year
9

Year
10

Sales ($);
Profits ($);
Profits as (%) of
Sales;
*Chart:
Year
1

Year
2

Year
3

Year
4

Year
5

Year
6

Year
7

Year
8

Sales Growth
(%);
Profits Growth
(%);
Period Required till Increase in Revenue/Sales
Avg. Years Needed
Avg.
Avg.
Avg.
Avg.

Years
Years
Years
Years

till
till
till
till

100M;
1B;
10B
100B

3. Rapidly Deteriorating Free Cash Flow:

Yea
r1
Cash flow from Operations ($)

Yea
r2

Year
3

Yea
r4

Year
5

Year
6

Yea
r7

Year
8

Year
9

Net Income ($)

Cash flow from Operations
less Net Income ($)

1. Margins far in excess of competitors (Esp. Imp. For cost competitive

countries).
2. Unconventional staffing model (Possibly transferring costs to unconsolidated
subsidiary.)
3. Key management background misdeeds
4. Non-transparent management transactions.

5. Use of authorized intermediaries which allows company to report sales

and purchases without verification.
6. Consistently negative free cash flow despite strong revenue and profit
growth. Raise of new Debt.
7. Listing through reverse takeover*** (Not a Red Flag out of itself);
8. Revenue and net profits generated almost entirely from valuation gains
of abalone stock
9. Increase in value of abalones - from an increase in quantity rather than in value
per unit (which will imply growth of the abalones). - *This can be derived by taking
the value of biological assets on the balance sheet and dividing by the reported
quantities of abalone.