Get started
OPEN-SOURCE SCRIPT

AuditLens - Profit Quality Analyzer

97
๐Ÿ“Š AuditLens - Profit Quality Analyzer

Ever wonder if a company's profits are real or just accounting tricks?

This indicator helps you spot potential earnings manipulation by analyzing the gap between reported profits and actual cash generation.

โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”
๐Ÿ” WHAT IT DOES
โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”

Calculates the "Divergence Ratio":
(Net Income - Operating Cash Flow) / Total Assets

โ€ข Positive divergence = Profits NOT backed by cash (risky)
โ€ข Negative divergence = Cash exceeds profits (healthy "cash cow")

โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”
๐Ÿšฆ SIGNAL GUIDE
โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”

๐Ÿ”ด RED FLAG (>10%): High risk - possible aggressive revenue recognition
๐ŸŸ  ORANGE: Divergence trending up for 3+ quarters
๐ŸŸก YELLOW: Divergence trending up for 2+ quarters
๐ŸŸข GREEN (<-5%): "Cash Cow" - strong cash generation
โœ… HEALTHY (0 to -5%): Normal profit quality

โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”
๐Ÿ“ˆ HOW TO USE
โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”

1. Add to any stock chart
2. Check the summary table (top right)
3. Look for RED FLAGS before buying
4. Prefer stocks with negative divergence (cash cows)

โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”
โš ๏ธ FAMOUS EXAMPLES
โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”

โ€ข Enron (2001): Showed profits but burned cash โ†’ Bankruptcy
โ€ข Wirecard (2020): โ‚ฌ1.9B "cash" that didn't exist โ†’ Fraud
โ€ข Luckin Coffee (2020): Fake revenue, no cash backing โ†’ Delisted

This indicator would have flagged all of them.

โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”
๐Ÿ”— FULL VERSION
โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”

Want more detailed analysis with:
โ€ข 6 advanced audit rules
โ€ข Historical trend analysis
โ€ข Receivables & Inventory checks
โ€ข Detailed reports for any stock

๐Ÿ‘‰ Try the full version FREE: auditlens-check.netlify.app

โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”
๐Ÿ“š THE LOGIC
โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”

Based on forensic accounting principles:
- Companies can manipulate earnings (accruals)
- But cash flow is harder to fake
- Big gap between the two = potential red flag

This is NOT financial advice. Always do your own research.

โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”โ”

Built by AuditLens team ๐Ÿ”
Questions? DM or comment below.

Open-source script

In true TradingView spirit, the creator of this script has made it open-source, so that traders can review and verify its functionality. Kudos to the author! While you can use it for free, remember that republishing the code is subject to our House Rules.

crg900118
EarningsFundamental AnalysisPortfolio management

Disclaimer

The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
EarningsFundamental AnalysisPortfolio management

Open-source script

In true TradingView spirit, the creator of this script has made it open-source, so that traders can review and verify its functionality. Kudos to the author! While you can use it for free, remember that republishing the code is subject to our House Rules.

crg900118

Disclaimer

The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.