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Accrual Ratio
How much of the reported profit is backed by real cash, after also accounting for what the company spent on investments. Research found that companies with high accruals tend to disappoint later.
Example
Above +0.25 is a red flag; around zero or negative means earnings are comfortably cash-backed. A fast-growing company funding expansion can show an elevated figure without anything being wrong.
Worth knowing
A quality signal for context, not a buy or sell signal.