Corva Blog

9 min read

Too Much Debt: How to Tell, and the Debt/Equity Trap

Every screener leads with debt-to-equity, and on a company that has bought back enough stock, that ratio returns a negative number and tells you nothing. The answer is not another ratio. It is a calendar.

10 min read

ChatGPT Financial Numbers: 5 Fields It Gets Wrong

Most wrong numbers from a language model are not invented. They are real figures lifted from the wrong line of a real filing, which is why checking EDGAR does not help: the number is in EDGAR. Here are the five fields to check instead.

10 min read

Covenant Headroom Calculation: Start With the Right EBITDA

An investor who divides net debt by trailing EBITDA and calls the gap covenant headroom has computed the wrong ratio, on purpose, from the lender's point of view. Here is how to find the real one, and rebuild it.

7 min read

Rising Days Sales Outstanding: When It Is a Red Flag

One elevated reading almost never is. What carries information is the gap between receivables growth and revenue growth, and how many consecutive years it stays open.

9 min read

Lease Liabilities as Debt: When to Count Them, When Not

The honest answer is not yes or no. It depends on the ratio you are computing, and one of the four common uses breaks entirely if you count leases without adjusting the denominator too.

8 min read

Goodwill on the Balance Sheet: The Ratio That Signals Risk

Every screener reports goodwill as a share of total assets. That is the wrong denominator. An impairment writes down against book equity, so equity is the number that tells you how much of the company survives one.

10 min read

Which Share Count to Use: The Cover Page Isn't It

A 10-K cover page carries one shares-outstanding figure, dated once a year. It is not the basic weighted average, not the diluted weighted average, and not the fully diluted count in the earnings-per-share note.

8 min read

When an Auditor Resigns: How to Read 8-K Item 4.01

The disclosure lands as a Form 8-K under Item 4.01, and most readers stop at the first paragraph. The information is in the last exhibit: a letter from the departing auditor saying whether the company told the truth.

10 min read

Insider Buying Signal: The Purchase-Date Test

Almost every guide to Form 4 stops at what the codes mean. Almost none ask when the purchase happened relative to what the insider had just learned, which is the question that separates a signal from a scheduled trade.

9 min read

Gross Margin Decline: 4 Causes, and the One Nobody Checks

Three of the four are economic. The fourth is an accounting reclassification that moves the line several points with no change to the business, and it is invisible unless you read the note.

9 min read

How to Read a 10-K in 30 Minutes

A large-cap annual report runs past 100 pages and most of it is boilerplate. Nine parts carry almost all of the signal. Here they are, in the order a professional reads them.