Grade: F — Major Red Flags
Framework: Schilit *Financial Shenanigans* + Beneish M-Score + forensic accounting principles
Data: SEC EDGAR 10-K (Filed 2026-02-19, FY ended December 31, 2025) + Yahoo Finance
Auditor: PricewaterhouseCoopers LLP — Unqualified opinion (1 critical audit matter: revenue recognition)
One-line verdict: Ball Corporation should be flagged for further investigation. Three screening checks fail: accounts receivable outpacing revenue for two consecutive years, cash covering only 17% of $7.0B total debt, and goodwill plus intangibles consuming 99% of equity. The company divested its aerospace business in February 2024, fundamentally reshaping its profile into a pure-play beverage packaging company. FY2025 net earnings from continuing operations were $912 million on $13.16 billion net sales, but the prior-year figure of $4.0B was distorted by $3.58 billion in after-tax gains from discontinued operations. The balance sheet carries $4.4B goodwill and $1.0B intangibles against only $5.4B equity — leaving virtually no margin for error on acquisition valuations. Inventory growth of 36% against 13% COGS growth is a watch item that deserves monitoring.
| Metric | Result |
|---|---|
| Red Flags | **3** (AR trend, cash-to-debt, goodwill/equity) |
| Watch Items | **1** (inventory vs COGS) |
| Checks Completed | **17/18** (1 N/A: impairment data) |
| Beneish M-Score | **-2.45** (clean; threshold is -2.22) |
| Z-Score | **3.15** (safe zone) |
| Auditor | PricewaterhouseCoopers LLP — serving since at least 1962 |
A Pure-Play Beverage Can Company After the Aerospace Exit
The 10-K states: "On February 16, 2024, the company completed the divestiture of its aerospace business." The transaction "represents a strategic shift; therefore, the company's consolidated financial statements reflect the aerospace business financial results as discontinued operations for all periods presented."
Ball now reports three segments, all beverage packaging:
| Segment | FY2025 Sales | FY2024 Sales | Operating Earnings | Margin |
|---|---|---|---|---|
| North & Central America | $6,286M | $5,619M | $772M | 12% |
| EMEA | $3,983M | $3,466M | $495M | 12% |
| South America | $2,892M | $2,710M | $399M | 14% |
Per the filing, the North and Central America segment is "Ball's largest segment, accounting for 48 percent of consolidated net sales in 2025." Sales increases across all three segments were driven by higher volumes and higher aluminum prices.
Profitability: Adjusted for the Aerospace Distortion
| Metric | FY2023 | FY2024 | FY2025 | Trend |
|---|---|---|---|---|
| Revenue | $12,062M | $11,795M | $13,161M | +9.1% over 3 years |
| Net Income (continuing ops) | $487M | $424M | $912M | Volatile |
| Gross Margin | 19.1% | 20.7% | 19.6% | Flat |
| EPS (diluted, continuing) | $1.53 | $1.39 | $3.31 | +138% |
| EPS (total, incl. discontinued) | $2.23 | $13.01 | $3.31 | Distorted by FY2024 aero gain |
Per the filing: "Net earnings attributable to Ball Corporation in 2025 decreased $3.10 billion compared to 2024 primarily due to decreases of $3.58 billion from discontinued operations, net of tax." The FY2024 headline number of $4.0B was almost entirely a one-time gain.
Cash Flow: Recovery After a Dismal 2024
| Metric | FY2023 | FY2024 | FY2025 |
|---|---|---|---|
| Operating Cash Flow | $1,863M | $115M | $1,262M |
| Net Income (cont. ops) | $487M | $424M | $912M |
| CFFO / NI | 3.83 | 0.27 | 1.38 |
| CapEx | $1,045M | $484M | $474M |
| Free Cash Flow | $818M | -$369M | $788M |
Per the filing: "Cash flows from operating activities were $1.26 billion in 2025, primarily driven by earnings from continuing operations of $915 million, along with reconciling adjustments to operating cash flows of $478 million and working capital outflows of $131 million." The FY2024 collapse to $115M was driven by cash taxes of $830 million estimated for the aerospace sale. FY2025 represents a normalization.
The 18-Point Screening
Revenue Quality
| # | Check | Result | Detail |
|---|---|---|---|
| A1 | DSO Change | ✅ | DSO 39 days, change +0 days YoY |
| A2 | AR vs Revenue Growth | ❌ | AR outpaced revenue for 2 consecutive years |
| A3 | Revenue vs CFFO | ✅ | Revenue +11.6%, CFFO +997%. Cash follows revenue |
A2 — AR outpacing revenue. This two-year pattern coincides with the post-aerospace restructuring period. Ball acquired a manufacturing facility in Winchester, Virginia (Florida Can Manufacturing), and segment sales grew through higher volumes. The AR growth relative to revenue warrants monitoring for loosening collection terms to new customers.
Expense Quality
| # | Check | Result | Detail |
|---|---|---|---|
| B1 | Inventory vs COGS | ⚠️ | Inventory growth 36.3% exceeds COGS 13.1% |
| B2 | CapEx vs Revenue | ✅ | CapEx growth -2.1% vs revenue +11.6% |
| B3 | SG&A Ratio | ✅ | SG&A/Gross Profit = 22.0%, excellent |
| B4 | Gross Margin | ✅ | 19.6%, change -1.1pp. Stable |
B1 — Inventory building. Per the filing, "a change of $0.01 per pound in the company's aluminum cost for inventory on hand will impact cash flows provided by (used in) operating activities by $30 million." With aluminum prices rising, a portion of the inventory growth is price-driven rather than volume-driven. Still, 36% inventory growth against 13% COGS deserves monitoring for potential obsolescence.
Cash Flow Quality
| # | Check | Result | Detail |
|---|---|---|---|
| C1 | CFFO vs Net Income | ✅ | CFFO/NI = 1.38. Profits backed by cash |
| C2 | Free Cash Flow | ✅ | FCF $788M, FCF/NI = 0.86 |
| C3 | Accruals Ratio | ✅ | -1.8%. Low accruals |
| C4 | Cash vs Debt | ❌ | Cash $1.2B covers only 17% of debt $7.0B |
C4 — Thin cash coverage. Total debt was $7.01 billion at December 31, 2025, up from $5.69 billion at year-end 2024. Per the filing: "On November 25, 2025 Ball refinanced its existing senior credit facilities" which include a $1.50 billion term loan. The company's debt load requires consistent cash generation from its single business line — beverage cans — leaving no buffer if demand declines.
Balance Sheet
| # | Check | Result | Detail |
|---|---|---|---|
| D1 | Goodwill + Intangibles | ❌ | $5.4B = 99% of equity |
| D2 | Leverage | ✅ | Debt/EBITDA = 3.4x |
| D3 | Soft Asset Growth | ✅ | Other assets -2.2% vs revenue +11.6% |
| D4 | Asset Impairment | — | No write-off data available |
D1 — Goodwill almost equals equity. The balance sheet shows goodwill $4,379M and intangible assets $982M against total equity of approximately $5,424M. Per the filing, Ball is "required at least annually to test the recoverability of goodwill. If general market conditions deteriorate in portions of our business, we could experience a significant decline in the fair value of our reporting units." With goodwill at 99% of equity, any impairment would have an outsized impact on book value.
Acquisition Risk
| # | Check | Result | Detail |
|---|---|---|---|
| E1 | Serial Acquirer FCF | ✅ | FCF after acquisitions positive |
| E2 | Goodwill Surge | ✅ | Goodwill change +2% YoY. Normal |
Manipulation Score
| # | Check | Result | Detail |
|---|---|---|---|
| F1 | Beneish M-Score | ✅ | -2.45 (threshold: < -2.22) |
M-Score of -2.45 passes comfortably. All components are benign.
Key Risks from the 10-K
1. Single Business Concentration
After divesting aerospace, Ball is a pure-play aluminum beverage container company. The filing warns that the company's "indebtedness could have significant consequences for our business," including "increasing our vulnerability to adverse economic, industry or competitive developments" and "requiring more of our cash flows from operations to be dedicated to the payment of principal and interest."
2. Tariff Exposure
Per the filing: "In September 2025, we received notice" of potential tariff impacts. The company sources aluminum globally and operates manufacturing facilities across North America, EMEA, and South America. Trade restrictions on aluminum imports could squeeze already-thin gross margins (19.6%).
3. Pension Obligations
The balance sheet shows employee benefit obligations of $499 million. The filing warns: "If the investments in Ball's pension plans, or in the multi-employer pension plans in which Ball participates, do not perform as expected, we may have to contribute additional amounts."
4. Revenue Recognition — The Auditor's Critical Audit Matter
PricewaterhouseCoopers identified revenue recognition from certain product revenue as the sole critical audit matter, noting the challenging nature of evaluating contractual terms across multi-year supply agreements with variable pricing components.
Summary
Grade: F. Three red flags — AR trend, thin cash coverage, goodwill-heavy balance sheet — on a now concentrated single-business company.
Ball's post-aerospace profile is that of a leveraged, single-product packaging company with $7.0B debt, $5.4B goodwill, and thin gross margins below 20%. Operating cash flow recovered to $1.3B in FY2025 from the anomalous $115M in FY2024 (distorted by aerospace sale taxes), and the M-Score is clean at -2.45. The company is not manipulating its books, but its balance sheet structure offers minimal cushion. Any sustained decline in beverage can demand or significant aluminum price spike could stress both margins and debt service capacity. The three failed checks are structural features of the business, not signs of fraud — but they represent genuine financial fragility.
**Disclaimer**: This report is based on Ball Corporation's FY2025 10-K filed with SEC EDGAR on February 19, 2026. This is NOT investment advice.
Data: SEC EDGAR 10-K + Yahoo Finance
Auditor: PricewaterhouseCoopers LLP (Unqualified opinion, 1 critical audit matter — revenue recognition)
Fiscal year ended: December 31, 2025