Earnings-Quality Composite

Install and import#

bash

npm install fintech-algorithms

import { earningsQualityComposite } from "fintech-algorithms/fundamental-analysis-and-valuation/integrated-equity-scoring/earnings-quality-composite";

Signature#

earningsQualityComposite(data)

Blends four earnings-quality pillar scores into one composite with fixed weights and shows what each pillar contributed.

Parameters#

Name	Type	Notes
`data`	`{ accrual_quality_score: number; cash_conversion_score: number; revenue_quality_score: number; manipulation_safety_score: number }`	The four pillar scores — `accrual_quality_score`, `cash_conversion_score`, `revenue_quality_score` and `manipulation_safety_score` — each a finite number between 0 and 100.

Returns#

{ state: string; method: string; components: Record<string, number>; weights: Record<string, number>; contributions: Record<string, number>; earnings_quality_score: number; band: string; coverage: number }

components echoes the four inputs, weights gives 0.3 to accrual_quality_score, 0.25 to cash_conversion_score and revenue_quality_score, and 0.2 to manipulation_safety_score, contributions is each score times its weight, and earnings_quality_score is their sum. band is strong at 75 or above, watch at 50 or above, otherwise weak; coverage is always 1.

Errors#

When any pillar score is not a finite number — throws TypeError
When any pillar score is below 0 or above 100 — throws RangeError

Complexity: time O(1), space O(1).

Worked example#

executed Captured by running this function on the input its own test provides. Real output of real code — but not asserted against a published figure.

Input#

data

{
  "accrual_quality_score": 70,
  "cash_conversion_score": 82,
  "revenue_quality_score": 74,
  "manipulation_safety_score": 66
}

Call#

earningsQualityComposite(data)

Returns#

object with 8 fields: state, method, components, weights, contributions, earnings_quality_score, band, coverage

{
  "state": "calculated",
  "method": "earnings-quality-weighted-composite",
  "components": {
    "accrual_quality_score": 70,
    "cash_conversion_score": 82,
    "revenue_quality_score": 74,
    "manipulation_safety_score": 66
  },
  "weights": {
    "accrual_quality_score": 0.3,
    "cash_conversion_score": 0.25,
    "revenue_quality_score": 0.25,
    "manipulation_safety_score": 0.2
  },
  "contributions": {
    "accrual_quality_score": 21,
    "cash_conversion_score": 20.5,
    "revenue_quality_score": 18.5,
    "manipulation_safety_score": 13.200000000000001
  },
  "earnings_quality_score": 73.2,
  "band": "watch",
  "coverage": 1
}

Other exports#

This module also exports calculate, pointInTimeStockScoringInputAssembly, stockScoringPeerCohortResolver, fundamentalMetricDirectionAndPeerNormalization, modelApplicabilityAndVariantRouter, accountingFinancialHealthComposite, dividendSafetyScore, balanceSheetResilienceScore, distressModelEnsemble, crossModelConflictAndDoubleCountingResolver, overallExplainableStockScore, scoreConfidenceMissingDataPenaltyAndAbstention, marketWideStockScreeningAndRanking, stockScoreHistoryMigrationAndChangeAttribution. Every module additionally exports run as an alias of its primary function, and a meta object carrying its catalog id, domain, family, shape and article URL.