Grade: C — Some Red Flags, Investigate
Framework: 18-point forensic screening + Schilit principles
Data: SEC EDGAR 10-K (Filed 2026-02-11, FY ended December 31, 2025) + Yahoo Finance
Auditor: Ernst & Young LLP — Unqualified opinion
One-line verdict: S&P Global is a high-quality financial data and analytics franchise — 70% gross margins, CFFO/NI of 1.26x, and an M-Score of -2.44 below the manipulation threshold. Revenue grew 7.9% to $15.3B, net income grew 16.0% to $4.47B, diluted EPS of $14.66 (up 19%). But the IHS Markit merger legacy dominates the balance sheet: goodwill and intangibles of $52.7B represent 169% of equity, triggering a fail. Cash of $1.8B covers only 13% of $13.6B in debt. The engine assigns Grade F; we override to C because the cash flow quality is clean and the goodwill is from a known, transformational merger — but $52.7B in intangible assets at 169% of equity is a real impairment risk that cannot be dismissed.
| Metric | Result |
|---|---|
| Red Flags (Engine) | **2** (goodwill 169% of equity, cash covers 13% of debt) |
| Watch Items | **2** (AR growth exceeding revenue, CapEx growth) |
| Checks Completed | **17/18** (1 N/A) |
| Beneish M-Score | **-2.44** (clean; threshold is -2.22) |
| F-Score (Fraud Probability) | **1.88** (0.70% probability — low) |
| Altman Z-Score | **N/A** (not applicable to financial services companies) |
| Auditor | Ernst & Young LLP — Unqualified opinion |
| Fiscal Year | 2025 (ended December 31, 2025) |
| Report Date | 2026-04-05 |
The Financial Data Powerhouse
Per the 10-K, S&P Global operates through Market Intelligence, Ratings, Commodity Insights, Mobility, and S&P Dow Jones Indices. The 2022 IHS Markit merger transformed the company into a diversified financial data platform. Operating margin reached 42% in 2025.
| Metric | 2022 | 2023 | 2024 | 2025 | Trend |
|---|---|---|---|---|---|
| Revenue | $11.2B | $12.5B | $14.2B | **$15.3B** | +7.9% |
| Net Income | $3.25B | $2.63B | $3.85B | **$4.47B** | +16.0% |
| Gross Margin | 66.4% | 66.9% | 69.3% | **70.2%** | Expanding |
| Net Margin | 29.1% | 21.0% | 27.1% | **29.2%** | Recovery |
| Operating Margin | — | 32% | 39% | **42%** | Expanding |
| Diluted EPS | — | $8.23 | $12.35 | **$14.66** | +19% |
| CFFO | $2.60B | $3.71B | $5.69B | **$5.65B** | -0.7% |
| FCF | $2.51B | $3.57B | $5.57B | **$5.46B** | -2.0% |
| Total Debt | $11.5B | $12.0B | $11.9B | **$13.6B** | +13.7% |
Per the filing, operating profit for 2025 included gain on dispositions of $273M, employee severance charges of $157M, disposition-related costs of $92M, acquisition-related costs of $48M, and legal costs of $48M. The company has been actively divesting non-core businesses.
The 18-Point Screening
| # | Check | Result | Detail |
|---|---|---|---|
| A1 | DSO Change | PASS | DSO 82 days, +8 days |
| A2 | AR vs Revenue Growth | WATCH | AR growth 20.0% exceeds revenue growth 7.9% |
| A3 | Revenue vs CFFO | PASS | Revenue +7.9%, CFFO flat |
| B1 | Inventory vs COGS | PASS | No inventory |
| B2 | CapEx vs Revenue | WATCH | CapEx growth 57.3% vs revenue 7.9% |
| B3 | SG&A Ratio | PASS | SG&A/GP = 31.7% |
| B4 | Gross Margin | PASS | 70.2%, +0.9pp — expanding |
| C1 | CFFO vs Net Income | PASS | CFFO/NI = 1.26 — clean |
| C2 | Free Cash Flow | PASS | FCF $5.46B |
| C3 | Accruals Ratio | PASS | -1.9% — clean |
| C4 | Cash vs Debt | **FAIL** | Cash $1.8B covers 13% of $13.6B debt |
| D1 | Goodwill + Intangibles | **FAIL** | $52.7B = 169% of equity |
| D2 | Leverage | PASS | Debt/EBITDA = 1.8x — comfortable |
| D3 | Soft Asset Growth | PASS | Normal |
| D4 | Asset Impairment | N/A | No data |
| E1 | Serial Acquirer FCF | PASS | FCF positive |
| E2 | Goodwill Surge | PASS | +2% YoY — stable |
| F1 | Beneish M-Score | PASS | -2.44 (< -2.22) |
Key Risks from the 10-K
1. Goodwill Impairment — $52.7B
The IHS Markit merger created $52.7B in goodwill + intangibles — 169% of equity. Even a 10% impairment would be ~$5.3B, exceeding a full year of net income. Per the filing, goodwill is tested annually. The risk is concentrated in Market Intelligence and Commodity Insights, where IHS Markit assets reside.
2. Low Cash-to-Debt Coverage
Cash of $1.8B against $13.6B in debt provides thin liquidity. SPGI relies on $5.65B annual CFFO to service debt. This is manageable in normal conditions but leaves limited buffer during stress.
3. Ratings Business Cyclicality
Per the 10-K, the Ratings segment depends on debt issuance volumes. A credit market freeze (similar to 2022) would sharply reduce rating fees. Operating profit swings: $4.0B (2023) to $5.6B (2024) to $6.5B (2025) — reflecting the bond issuance cycle.
4. Regulatory Risk
Credit rating agencies are heavily regulated. Per Item 1A, changes to the regulatory framework for NRSROs (nationally recognized statistical rating organizations) could affect the Ratings business model.
5. AR Growth
AR grew 20% vs revenue growth of 7.9% — a watch item. This could reflect timing of annual subscription renewals or large institutional billings, but if the pattern persists, it warrants investigation.
Summary
Grade: C. Some red flags — investigate. Excellent cash flow quality and expanding margins, but $52.7B in intangibles at 169% of equity and thin cash liquidity create genuine risk.
S&P Global's earnings quality is clean: CFFO/NI of 1.26x, M-Score of -2.44, accruals of -1.9%, and Debt/EBITDA of only 1.8x. The issues are balance sheet composition — the IHS Markit merger loaded $52.7B in intangible assets against $31.1B in equity. This creates material impairment exposure. Cash of $1.8B provides thin coverage against $13.6B in debt, though $5.65B annual CFFO services debt comfortably. Watch AR trends, goodwill test outcomes, and the ratings cycle.
**Disclaimer**: This report is based on S&P Global Inc.'s fiscal year 2025 10-K filed with the SEC on February 11, 2026. This is NOT investment advice.
**About EarningsGrade**: We screen earnings reports for financial red flags using an 18-point forensic framework. Grade C means some red flags exist that warrant investigation.