Forensic Investing

Basically net income - cash flow from continuing operations and cash flow from investing. Result is total accruals. Negative accruals is a good sign. When accruals are negative a company isn't bulking up its reported earnings with a lot of noncash charges.

Next step put in context, look at accruals relative to a company's size. Divide total assets into accruals to express the result as a percentage, and you have Russell's accruals ration. Anything above 5% is a sell, below -5% is a BUY.



Sloan's site

Value Dog (student of Sloane)
Earnings Torpedo (student)