Arm Holdings plc — Earnings Quality Grade F
ARM · Technology
Major red flags
Screening Summary
Financial Trends
Revenue & Net Income ($B)
Margins (%)
18-Point Screening
Revenue Quality
DSO increased by 13 days
AR growth 41.7% exceeds revenue growth 23.9%
Revenue grew 23.9% but CFFO declined -63.6%
Expense Quality
No material inventory
CapEx growth 67.1% is >2x revenue growth 23.9%
SG&A/Gross Profit = 25.3%, excellent (<30%)
Gross margin 97.0%, change +1.7pp. Stable
Cash Flow Quality
CFFO/NI = 0.50. Below 1.0
FCF $0.2B, FCF/NI = 0.20
Accruals ratio = 4.4%. Low accruals
Cash $2.8B covers debt $0.4B
Balance Sheet Health
Goodwill+Intangibles $1.8B = 26% of equity. Manageable
Debt/EBITDA = 0.4x. Healthy
Other assets 13.0% vs revenue 23.9%. Normal
No write-off data
Acquisition Risk
FCF after acquisitions positive
Goodwill+Intangibles change -0% YoY. Normal
Manipulation Score
M-Score = -1.75 (> -1.78). LIKELY MANIPULATOR
Beneish M-Score
Altman Z-Score
Generated from public financial data using forensic accounting frameworks. Not investment advice. Data: Yahoo Finance · 2026-04-08