Red Cat Holdings, Inc. — Earnings Quality Grade F
RCAT · Industrials
Major red flags
Screening Summary
Management Signals
Source: SEC EDGAR 8-K Item 5.02, with exhibit links when available
Financial Trends
Revenue & Net Income ($B)
Margins (%)
18-Point Screening
Revenue Quality
DSO surged by 224 days (10 → 234)
Small-cap context: DSO swings on a small revenue base are more often quarterly customer-mix effects than red flags.
AR growth 5248.7% exceeds revenue growth 128.4%
Revenue grew 128.4% but CFFO declined -379.3%
Small-cap context: Small-cap revenue/CFFO ratio is sensitive to growth-stage working-capital draws.
Expense Quality
Inventory 81.1% vs COGS 178.7%. Normal
CapEx growth 2466.4% is >2x revenue growth 128.4%
SG&A/Gross Profit = 3923.2%, exceeds 70%
Gross margin swung -17.5pp (20.6% → 3.1%)
Cash Flow Quality
CFFO/NI = 1.24. Profits backed by cash
FCF is negative ($-0.1B)
Accruals ratio = 6.2%. Elevated
Cash $0.2B covers debt $0.0B
Balance Sheet Health
Goodwill+Intangibles $0.0B = 10% of equity. Manageable
Debt/EBITDA = -0.3x. Healthy
Insufficient data
Write-offs normal
Acquisition Risk
FCF after acquisitions negative for 3 years
Small-cap context: A single acquisition on a small balance sheet can trip serial-acquirer logic.
Goodwill+Intangibles change -6% YoY. Normal
Manipulation Score
M-Score = 22.48 (> -1.78). LIKELY MANIPULATOR
Small-cap context: Beneish M-Score was calibrated on large-caps; small-cap DSO/inventory volatility mechanically inflates it.
Beneish M-Score
Altman Z-Score
Generated from public financial data using forensic accounting frameworks. Not investment advice. Data: Yahoo Finance · 2026-04-25