Red flags in financial filings — what we check automatically
The filing is 200 pages. The problem is on page 87, in a footnote, expressed as a ratio you'd never scroll to before the market opens.
Manual review doesn't scale. Checklists do — if they're computed from structured KPIs, not from hope.
OpenFilings runs quantitative red-flag detection on every enriched periodic filing and surfaces alerts inline on Filings. No separate screener. No batch job you forgot to run.
What we watch
Dilution & stock-based comp. SBC as a % of revenue creeping up while net income flatlines? That's a silent tax on shareholders. Apple's FY2024: SBC at 3.1% of revenue on $416.2B top line — healthy context for a mega-cap, but the trend matters more than the snapshot.
Profitability stress. Negative or compressing operating margins, net losses on recurring revenue bases, gross margin collapse — the signals that show up in canonical margin fields before they show up in headlines.
Cash vs earnings. Operating cash flow diverging from net income — classic earnings quality flag. We compute cash conversion from filing data, not press release adj. EBITDA.
Balance sheet pressure. Liquidity ratios, debt/equity drift, runway proxies when burn metrics apply.
Governance signals. Where filing structure exposes them quantitatively.
Categories map to: PROFITABILITY, GROWTH, BALANCE_SHEET, GOVERNANCE, DILUTION — surfaced with severity, linked back to filing sections when available.
Why manual review fails
You have 40 names in coverage. Each files quarterly across US, Japan, Korea. That's hundreds of documents per year.
You're not going to re-read every MD&A for SBC language. You're going to miss the one filing where dilution accelerated.
Automated flags don't replace judgment. They route your attention to the filings that need it today.
Where you see them
On Filings, enriched entries show red-flag counts inline — click through for detail. Same flags available via MCP and the REST API on KPI responses.
Cross-market: a Korean semi name and a US platform name flagged on the same vocabulary, in the same feed window.
The pitch
You wouldn't trade on stale prices. Why read filings without automated quality signals?