CompanyGraph
Use to find companies where this pattern is active.
OCF is at or above net income for the most recent year; gross profit increased across the last 4 year-over-year transitions; EBIT margin is above the company's historical median while recent sales growth is below baseline (industry-benchmarked composite).
State
High OCF-to-NI ratio co-occurs with multi-year gross-profit growth and the margin-elevation-with-deceleration composite
Emergence
Three readings line up: operating cash flow is at or above net income (the ratio is at or above the 0–2.0 scale midpoint), gross profit has increased in most or all of the last 4 year-over-year transitions, and the industry-benchmarked composite of margin-elevation-vs-history and growth-deceleration-vs-history is high. The first reading is a single-year cash-vs-accrual ratio; the second is a multi-year fundamental count; the third is a present-state configuration of margin and growth relative to the same company's history.
Limits
Each observation describes a specific accounting or statistical configuration. The OCF/NI ratio is one period's snapshot — working-capital swings and one-time items move it in either direction. The gross-profit YoY count uses `Gross_profit` (the typeKey suffix '3y' is conventional but the formula counts 4 transitions). The reversion-risk composite records the present configuration of margin elevation and growth deceleration against the same company's own historical median; the conventional 'reversion risk' framing is predictive — these formulas only record the current setup.
Explanation
Three readings co-occur: - OCF Relative to Net Income (ocf-to-net-income): the cash-to-accruals ratio for the most recent annual period (mapped against 0–2.0 scale). The conventional 'earnings quality' framing is interpretive; the formula records the ratio only. - Gross Profit Increased Year-Over-Year (increase-consistency-income-3y): count of years with positive year-over-year change in `Gross_profit`. The instance typeKey suffix is '3y' but the formula counts 4 transitions. - Margins Elevated With Decelerating Growth (margins-elevated-with-decelerating-growth): industry-benchmarked composite of margin-elevation-vs-historical-median and growth-deceleration-vs-baseline. Records present configuration; does not predict reversion. The formulas describe the current configuration; they do not say whether or when reversion follows.
Interpretation
Co-occurrence of a high OCF-to-NI ratio with a multi-year gross-profit-growth count and the industry-benchmarked margin-elevation-with-deceleration composite. The formulas describe present configuration; they do not predict reversion.
Required Observations
Increase Consistency Income 3y
Gross profit posted a year-over-year increase in each of the recent fiscal years
Margins Elevated With Decelerating Growth
EBIT margin is currently elevated above its own historical median while recent sales growth has slowed.
Ocf To Net Income
How operating cash flow compares to reported net income for the latest year.