FinZonal Research Methodology · Beta

Financial Health Score Methodology

The FinZonal Financial Health Score is an experimental, rules-based assessment of selected financial characteristics reported in a company's annual SEC filings. Scores range from 0 to 100.

Important: The score is a financial-data screening tool, not a credit rating, investment recommendation, prediction of future performance, or assessment of stock valuation.

1. Data sources

FinZonal uses structured US-GAAP financial observations obtained from SEC EDGAR filings, primarily Form 10-K and Form 10-K/A. Calculations use annual reporting periods, selected balance-sheet values, and prior-year comparisons. Each published company score identifies its fiscal year and source accession where available.

2. Five scoring categories

Category	Weight	Measurements
Profitability	25%	Net profit margin and return on assets
Liquidity	20%	Current ratio
Debt management	20%	Debt-to-equity ratio
Cash flow	25%	Operating cash flow margin and free cash flow margin
Financial stability	10%	Annual revenue growth and net income growth

3. How the score is calculated

Each financial ratio is converted to a 0–100 component score using fixed lower and upper thresholds. Values outside the thresholds are capped at 0 or 100. Where a category has two measurements, their component scores are averaged. Category scores are then weighted and added to produce the overall score.

Overall score = (Profitability × 25%) + (Liquidity × 20%) + (Debt management × 20%) + (Cash flow × 25%) + (Financial stability × 10%).

4. Rating levels

Score	Rating
80–100	Very Strong
65–below 80	Strong
50–below 65	Moderate
35–below 50	Weak
Below 35	Very Weak

5. Eligibility requirements

A company must have sufficient, internally consistent annual financial observations to calculate all five categories. The beta methodology also requires suitable industry classification and excludes certain specialized financial businesses that need different scoring methods. Missing or incompatible data results in no score.

6. Limitations

Fixed thresholds are not tailored to every industry.
Reported accounting values may not be fully comparable between companies.
Some debt and capital-expenditure definitions vary between filers.
High scores do not guarantee financial safety or future profitability.
Low scores do not necessarily imply distress or insolvency.
Missing scores do not indicate poor financial health.
The methodology is experimental and has not been independently validated.

7. Updates and revisions

Scores reflect the financial observations available when calculated. FinZonal may update scores following new annual SEC filings, corrected source data, or methodology changes. Updates are not currently guaranteed on a particular schedule. Historical scores may not be directly comparable if the methodology changes.

8. SEC filing references

Original regulatory filings and structured company financial information are available through SEC EDGAR.

Beta disclosure: FinZonal Financial Health Scores are informational research estimates. They should be considered alongside company filings, accounting notes, industry conditions, and other independent analysis.