Which stocks will spring earnings shocks?
Which firms will deliver earnings shocks?
What can go wrong
How profits can be flattered using accruals
The accruals ratio
A short example
Does it still work now?
That notwithstanding, be careful about placing too much reliance on a single ratio – broader screens that incorporate it are more likely to be reliable these days. Examples include the Piotrowski F-score, which looks at corporate strength and bankruptcy risk using a number of metrics.