HOOD · Fraudtracker

HOOD · Robinhood Markets, Inc.

CIK 1783879 · SIC 6211 Security Brokers, Dealers & Flotation Companies · Latest FY 2025

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-3.04

Beneish M

0.70

Altman Z

0.73

Dechow F

3/9

Piotroski

2/6

Montier C

All metrics — FY2025 · click any row to see the formula

Beneish M-Score-3.04

Composite earnings-manipulation index built from 8 component ratios.

M = −4.84 + 0.92·DSRI + 0.528·GMI + 0.404·AQI + 0.892·SGI + 0.115·DEPI − 0.172·SGAI + 4.679·TATA − 0.327·LVGI

Plugged in:

M = −4.84 + 0.92 × 0.000 = +0.000 + 0.528 × 1.000 = +0.528 + 0.404 × 1.507 = +0.609 + 0.892 × 1.373 = +1.225 + 0.115 × 0.997 = +0.115 − 0.172 × 0.000 = -0.000 + 4.679 × -0.066 = -0.308 − 0.327 × 1.122 = -0.367 = -3.04

Threshold: >-1.78 flags possible manipulation. >-1.49 is the original Beneish (1999) threshold.

Altman Z-Score0.70

Bankruptcy / financial-distress index. Distress correlates with stronger incentive to manage earnings.

Z = 1.2·X1 + 1.4·X2 + 3.3·X3 + 0.6·X4 + 1.0·X5 X1 = (Current Assets − Current Liabilities) / Total Assets [working capital] X2 = Retained Earnings / Total Assets [accumulated profitability] X3 = EBIT / Total Assets [operating efficiency] X4 = Market Cap / Total Liabilities [solvency] X5 = Revenue / Total Assets [asset turnover]

Threshold: Z < 1.81 = distress zone, 1.81–2.99 = grey zone, >2.99 = safe.
Note: this build uses Equity/Assets as a proxy for X2 (no retained-earnings concept pulled) and 0 for X4 (no price feed wired in yet), so absolute Z values are biased; rankings are still meaningful.

Dechow F-Score0.73

Probability of a material misstatement, trained on SEC Accounting and Auditing Enforcement Releases (Dechow et al. 2011, Model 1).

predicted = −7.893 + 0.790·RSST_accruals + 2.518·ΔReceivables + 1.191·ΔInventory + 1.979·%SoftAssets + 0.171·%ΔRevenue − 0.932·ΔROA prob = 1 / (1 + exp(−predicted)) F-Score = prob / 0.0037 (unconditional rate of misstatement)

Threshold: F > 1 = above average risk; > 2.45 = high risk; > 4.62 = very high risk.

Piotroski F-Score3 / 9

Sums 9 binary indicators of fundamental health. Higher is better.

+1 if Net Income > 0 +1 if CFO > 0 +1 if ΔROA > 0 +1 if CFO > Net Income (accrual quality) +1 if Δ(LongTermDebt/TA) < 0 +1 if Δ(CurrentRatio) > 0 +1 if shares outstanding did not rise +1 if Δ(GrossMargin) > 0 +1 if Δ(AssetTurnover) > 0

Threshold: 0–3 = weak, 4–6 = average, 7–9 = strong.

Montier C-Score2 / 6

Six binary fraud screens (Montier 2008). Higher = more flags fired simultaneously.

+1 if Net Income > CFO (earnings exceed cash) +1 if Days Sales Outstanding rising +1 if Days Sales of Inventory rising +1 if (Other current assets / TA) rising +1 if Depreciation/PP&E declining +1 if Total assets growing >10% YoY (acquisition-fueled growth)

Threshold: ≥4 of 6 is the warning band.

DSRI · Days Sales Receivable Index0.000

Year-over-year change in (Receivables / Sales). Rising means collections slowing — a classic revenue-recognition red flag.

DSRI = (AR_t / Sales_t) ÷ (AR_t-1 / Sales_t-1)

Threshold: >1.31 in Beneish's original sample.

GMI · Gross Margin Index1.000

Inverse-direction: prior gross margin divided by current. >1 means margins deteriorated.

GMI = ((Sales_t-1 − COGS_t-1) / Sales_t-1) ÷ ((Sales_t − COGS_t) / Sales_t)

Threshold: >1.20 raises pressure to manage earnings.

AQI · Asset Quality Index1.507

Tracks change in soft (non-current, non-PP&E) assets as a share of total. Rising = intangibles, deferred costs, or capitalized expenses growing fast.

AQI = (1 − (CurrentAssets_t + PPE_t) / TA_t) ÷ (1 − (CurrentAssets_t-1 + PPE_t-1) / TA_t-1)

Threshold: >1.20.

SGI · Sales Growth Index1.373

Simply revenue growth. Aggressive growth alone isn't fraud, but pairs with other flags.

SGI = Sales_t / Sales_t-1

Watch above 1.50 in combination with DSRI/TATA.

DEPI · Depreciation Index0.997

Prior depreciation rate divided by current. >1 means depreciation slowed — useful lives may have been extended to suppress expense.

DEPI = (Dep_t-1 / (Dep_t-1 + PPE_t-1)) ÷ (Dep_t / (Dep_t + PPE_t))

Threshold: >1.10.

SGAI · SG&A Index0.000

Change in SG&A as a fraction of sales.

SGAI = (SGA_t / Sales_t) ÷ (SGA_t-1 / Sales_t-1)

Sharp moves either direction can signal one-time charges or aggressive capitalization.

LVGI · Leverage Index1.122

Change in (Total Liabilities / Total Assets). Rising leverage increases covenant pressure.

LVGI = (TL_t / TA_t) ÷ (TL_t-1 / TA_t-1)

Threshold: >1.20 in combination with weak earnings quality.

TATA · Total Accruals to Total Assets-0.066

Net income that didn't show up as cash, scaled by assets. The Beneish formulation.

TATA = (NetIncome_t − CFO_t) / TotalAssets_t

Threshold: >0.03 is the classic Sloan accruals red flag; the higher and more sustained, the worse.

Sloan accruals ratio-0.079

The original Sloan (1996) ratio: same numerator, scaled by *average* assets.

Accruals ratio = (NI_t − CFO_t) / ((TA_t + TA_t-1) / 2)

High-accrual firms historically underperform low-accrual firms by 10%+ annually.

CFO − Net Income gap3.183

Operating cash flow minus net income, scaled by |NI|. Strongly negative = NI > CFO, which is the highest-conviction earnings-quality red flag.

gap = (CFO_t − NI_t) / (|NI_t| + 1)

Threshold: < −0.30.

Revenue − A/R growth gap0.373

Revenue YoY growth minus receivables YoY growth, in decimal points. Negative = receivables outpacing sales.

gap = (Rev_t − Rev_t-1)/Rev_t-1 − (AR_t − AR_t-1)/AR_t-1

Threshold: < −0.10. Suggests bill-and-hold, channel stuffing, or collection deterioration.

Revenue − Inventory growth gap0.373

Revenue YoY growth minus inventory YoY growth.

gap = (Rev_t − Rev_t-1)/Rev_t-1 − (Inv_t − Inv_t-1)/Inv_t-1

Threshold: < −0.10. Inventory build outpacing demand → future write-down risk.

Goodwill / Total Assets0.007

Share of the balance sheet attributable to past acquisition premiums.

GW/TA = Goodwill_t / TotalAssets_t

Threshold: >0.40 = acquisition-heavy; impairment risk is elevated when cash flow softens.

Composite scores over time

Earnings quality signals

Triggered red flags (3)

Severity	Code	Headline	Detail
high	`Z_SCORE`	Altman Z-Score 0.70 indicates distress	Distress correlates with stronger incentive to manage earnings.
medium	`PIOTROSKI`	Piotroski F-Score 3/9	Weak fundamental health: profitability, leverage, or efficiency deteriorating.
medium	`AQI`	Asset Quality Index 1.51	Soft assets (intangibles, deferrals) growing faster than hard assets.

Rule-based narrative

Robinhood Markets, Inc. (HOOD) FY2025 — 3 flags (1 high, 2 medium, 0 low).

Flags are scattered rather than forming a single textbook pattern. Review each finding individually before drawing conclusions.

Triggered findings:
- [HIGH] Altman Z-Score 0.70 indicates distress — Distress correlates with stronger incentive to manage earnings.
- [MEDIUM] Piotroski F-Score 3/9 — Weak fundamental health: profitability, leverage, or efficiency deteriorating.
- [MEDIUM] Asset Quality Index 1.51 — Soft assets (intangibles, deferrals) growing faster than hard assets.

Claude analysis

Click "Generate" to call Claude. Findings JSON is sent as structured input; the model is instructed to explain plausible narratives without inventing facts.