Cerence Inc. — Earnings Quality Grade F
CRNC · Technology
Major red flags
Screening Summary
Management Signals
Financial Trends
Revenue & Net Income ($B)
Margins (%)
18-Point Screening
Revenue Quality
DSO surged by 16 days (69 → 85)
Small-cap context: DSO swings on a small revenue base are more often quarterly customer-mix effects than red flags.
AR growth -6.1% vs revenue growth -24.0%
Revenue -24.0%, CFFO 255.7%. Cash follows revenue
Expense Quality
No material inventory
CapEx growth 187.3% is >2x revenue growth -24.0%
SG&A/Gross Profit = 38.5%. Normal
Gross margin 72.7%, change -0.9pp. Stable
Cash Flow Quality
CFFO < Net Income for 3 consecutive years
Small-cap context: Small-cap CFFO/NI often diverges from working-capital swings, not necessarily manipulation.
FCF $0.0B, FCF/NI = -2.50
Accruals ratio = -12.7%. Low accruals
Cash $0.1B covers only 40% of debt $0.2B
Balance Sheet Health
Goodwill+Intangibles $0.3B = 198% of equity. Over 50%
Debt/EBITDA = 18.2x (>4x). Interest coverage = 1.3x (<2x). Financial stress
Other assets -16.8% vs revenue -24.0%. Normal
No write-off data
Acquisition Risk
FCF after acquisitions positive
Goodwill+Intangibles change 0% YoY. Normal
Manipulation Score
M-Score = -2.99 (< -2.22). Unlikely manipulator
Portfolio monitoring
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Beneish M-Score
Altman Z-Score
Generated from public financial data using forensic accounting frameworks. Not investment advice. Data: Yahoo Finance · 2026-04-25