""" Known-case tests for the Accounting Quality / Red Flags module (StockLab overhaul, Part 8). Plain-function style — see test_metrics_known_cases.py for why. """ from __future__ import annotations from datetime import date from app.engines.quality.accounting import assess_accounting_quality from app.engines.types import FinancialSnapshot, LineItems, MarketCapBucket def _li(period_end: str, **kwargs) -> LineItems: defaults = dict( security_id="TEST", period_end=date.fromisoformat(period_end), period_type="FY", filing_date=date.fromisoformat(period_end), currency="USD", ) defaults.update(kwargs) return LineItems(**defaults) def _snapshot(current: LineItems, history: list[LineItems]) -> FinancialSnapshot: return FinancialSnapshot( security_id="TEST", industry_id="TEST_IND", sector_id="DEFAULT", market_cap_bucket=MarketCapBucket.LARGE, calculation_date=current.period_end, current=current, history=history, ) def test_clean_company_raises_no_flags(): cur = _li("2025-12-31", revenue=1100, net_income=150, operating_cash_flow=170, capital_expenditure=40, receivables=110, inventory=90, total_debt=210, diluted_shares=101, goodwill=50, total_assets=1000, operating_income=200) h = [_li("2024-12-31", revenue=1000, net_income=140, operating_cash_flow=160, receivables=100, inventory=85, total_debt=200, diluted_shares=100, operating_income=190)] report = assess_accounting_quality(_snapshot(cur, h)) assert report.flags == [] assert "cash_flow_quality" in report.checks_run def test_earnings_quality_flag_when_ocf_trails_net_income(): cur = _li("2025-12-31", net_income=100, operating_cash_flow=30) report = assess_accounting_quality(_snapshot(cur, [])) keys = [f.key for f in report.flags] assert "cash_flow_quality" in keys flag = next(f for f in report.flags if f.key == "cash_flow_quality") assert flag.severity == "HIGH" # 30/100 = 0.30 < 0.4 threshold def test_receivables_growth_outpacing_revenue_flagged(): cur = _li("2025-12-31", revenue=1100, receivables=180) # revenue +10%, receivables +80% h = [_li("2024-12-31", revenue=1000, receivables=100)] report = assess_accounting_quality(_snapshot(cur, h)) keys = [f.key for f in report.flags] assert "receivables_vs_revenue_growth" in keys def test_goodwill_concentration_flag(): cur = _li("2025-12-31", goodwill=600, total_assets=1000) report = assess_accounting_quality(_snapshot(cur, [])) flag = next(f for f in report.flags if f.key == "goodwill_concentration") assert flag.severity == "HIGH" # 60% > 50% threshold def test_share_dilution_flag(): cur = _li("2025-12-31", diluted_shares=112) h = [_li("2024-12-31", diluted_shares=100)] report = assess_accounting_quality(_snapshot(cur, h)) flag = next(f for f in report.flags if f.key == "share_dilution") assert flag.severity == "HIGH" # 12% > 10% def test_insufficient_data_is_skipped_not_silently_passed(): cur = _li("2025-12-31") # nothing populated report = assess_accounting_quality(_snapshot(cur, [])) assert report.flags == [] assert "cash_flow_quality" in report.checks_skipped_insufficient_data assert "goodwill_concentration" in report.checks_skipped_insufficient_data def test_remaining_unimplemented_checks_are_declared_not_silently_dropped(): """UPDATED (Part A8). This test previously asserted that "one_off_items" and "acquisition_dependence" were declared NOT IMPLEMENTED. Both are now implemented as checks #9 and #10 (under names that describe what they actually measure), so that assertion was changed rather than deleted — what it protects is the invariant that anything NOT implemented must be declared, and that invariant still has real subjects.""" report = assess_accounting_quality(_snapshot(_li("2025-12-31"), [])) assert any("itemized_special_charges" in c for c in report.checks_not_implemented) assert any("cash_paid_for_acquisitions" in c for c in report.checks_not_implemented) assert any("stock_based_compensation_burden" in c for c in report.checks_not_implemented) # every declared-not-implemented entry must carry a reason, not just a name assert all(len(c) > 40 and ("—" in c or "-" in c) for c in report.checks_not_implemented) # and the two new checks must be genuinely run, not quietly moved to the not-implemented list assert "non_operating_earnings_reliance" in report.checks_run assert "acquisition_driven_growth" in report.checks_run # --- Part A8: check #9, non-operating earnings reliance --- def test_non_operating_earnings_reliance_flagged_when_residual_dominates(): """Operating income 40, interest expense 10 -> operating contribution 30. Pre-tax income 100 means 70 of pre-tax profit (70%) came from below the operating line.""" cur = _li("2025-12-31", operating_income=40, interest_expense=10, pretax_income=100) report = assess_accounting_quality(_snapshot(cur, [])) flag = next(f for f in report.flags if f.key == "non_operating_earnings_reliance") assert flag.severity == "HIGH" assert flag.evidence["non_operating_residual"] == 70 assert abs(flag.evidence["share_of_pretax"] - 0.70) < 1e-9 def test_non_operating_earnings_reliance_medium_severity_band(): """Residual 35 on pre-tax 100 = 35% -> above the 25% threshold, below the 50% HIGH band.""" cur = _li("2025-12-31", operating_income=60, interest_expense=5, pretax_income=100) report = assess_accounting_quality(_snapshot(cur, [])) flag = next(f for f in report.flags if f.key == "non_operating_earnings_reliance") assert flag.severity == "MEDIUM" assert flag.evidence["non_operating_residual"] == 45 # 100 - 60 + 5 def test_non_operating_earnings_reliance_not_flagged_for_clean_operating_profit(): """Operating income 100, interest 8, pre-tax 92 -> residual exactly 0.""" cur = _li("2025-12-31", operating_income=100, interest_expense=8, pretax_income=92) report = assess_accounting_quality(_snapshot(cur, [])) assert not any(f.key == "non_operating_earnings_reliance" for f in report.flags) def test_non_operating_earnings_reliance_flags_large_charge_not_just_gain(): """A big one-off CHARGE is as much a quality signal as a big one-off gain: operating income 100, interest 0, pre-tax 20 -> a -80 residual, 400% of pre-tax income.""" cur = _li("2025-12-31", operating_income=100, interest_expense=0, pretax_income=20) report = assess_accounting_quality(_snapshot(cur, [])) flag = next(f for f in report.flags if f.key == "non_operating_earnings_reliance") assert flag.severity == "HIGH" assert flag.evidence["non_operating_residual"] == -80 assert "charge" in flag.description def test_non_operating_earnings_reliance_skipped_when_pretax_missing(): cur = _li("2025-12-31", operating_income=100) report = assess_accounting_quality(_snapshot(cur, [])) assert "non_operating_earnings_reliance" in report.checks_skipped_insufficient_data assert not any(f.key == "non_operating_earnings_reliance" for f in report.flags) def test_non_operating_earnings_reliance_skipped_when_pretax_is_zero(): """Guard against ZeroDivisionError / a meaningless 100%-of-zero ratio.""" cur = _li("2025-12-31", operating_income=100, pretax_income=0) report = assess_accounting_quality(_snapshot(cur, [])) assert "non_operating_earnings_reliance" in report.checks_skipped_insufficient_data def test_non_operating_earnings_reliance_materiality_floor_suppresses_noise(): """Residual is 50% of pre-tax income but only 0.1% of revenue — a rounding error at the company's scale, not an earnings-quality signal. Must not flag.""" cur = _li("2025-12-31", revenue=100_000, operating_income=100, interest_expense=0, pretax_income=200) report = assess_accounting_quality(_snapshot(cur, [])) assert not any(f.key == "non_operating_earnings_reliance" for f in report.flags) def test_non_operating_earnings_reliance_still_flags_when_material_against_revenue(): """Same 50% share, but now the residual is 10% of revenue — a real signal, must still flag.""" cur = _li("2025-12-31", revenue=1_000, operating_income=100, interest_expense=0, pretax_income=200) report = assess_accounting_quality(_snapshot(cur, [])) assert any(f.key == "non_operating_earnings_reliance" for f in report.flags) def test_non_operating_earnings_reliance_applies_without_revenue(): """Revenue missing -> the floor cannot be evaluated, so it must not silently suppress the check (fail open on the flag, not closed).""" cur = _li("2025-12-31", operating_income=40, interest_expense=10, pretax_income=100) report = assess_accounting_quality(_snapshot(cur, [])) assert any(f.key == "non_operating_earnings_reliance" for f in report.flags) # --- Part A8: check #10, acquisition-driven growth --- def test_acquisition_driven_growth_flagged_on_material_goodwill_jump(): """Goodwill 100 -> 220 (+120) against prior-year total assets of 1000 = 12% intensity, with revenue up 30% -> HIGH (the revenue-growth clause).""" cur = _li("2025-12-31", goodwill=220, total_assets=1400, revenue=1300) h = [_li("2024-12-31", goodwill=100, total_assets=1000, revenue=1000)] report = assess_accounting_quality(_snapshot(cur, h)) flag = next(f for f in report.flags if f.key == "acquisition_driven_growth") assert flag.severity == "HIGH" assert flag.evidence["goodwill_delta"] == 120 assert abs(flag.evidence["goodwill_delta_over_prior_assets"] - 0.12) < 1e-9 assert "unlikely to be wholly organic" in flag.description def test_acquisition_driven_growth_medium_when_spend_is_material_but_growth_is_modest(): """8% intensity, revenue +6% -> above the 5% threshold, below both HIGH triggers.""" cur = _li("2025-12-31", goodwill=180, total_assets=1200, revenue=1060) h = [_li("2024-12-31", goodwill=100, total_assets=1000, revenue=1000)] report = assess_accounting_quality(_snapshot(cur, h)) flag = next(f for f in report.flags if f.key == "acquisition_driven_growth") assert flag.severity == "MEDIUM" def test_acquisition_driven_growth_notes_spend_without_growth(): """Material goodwill added, revenue flat — arguably the worse case, and the description must say so rather than reusing the 'not organic' wording.""" cur = _li("2025-12-31", goodwill=180, total_assets=1200, revenue=1000) h = [_li("2024-12-31", goodwill=100, total_assets=1000, revenue=1000)] report = assess_accounting_quality(_snapshot(cur, h)) flag = next(f for f in report.flags if f.key == "acquisition_driven_growth") assert "did not grow materially" in flag.description def test_acquisition_driven_growth_not_flagged_for_immaterial_goodwill_change(): """+20 goodwill on 1000 prior assets = 2%, below the 5% threshold.""" cur = _li("2025-12-31", goodwill=120, total_assets=1050, revenue=1050) h = [_li("2024-12-31", goodwill=100, total_assets=1000, revenue=1000)] report = assess_accounting_quality(_snapshot(cur, h)) assert not any(f.key == "acquisition_driven_growth" for f in report.flags) def test_acquisition_driven_growth_not_flagged_when_goodwill_falls(): """A goodwill impairment is a real signal, but it is NOT this check's signal — check #7 (goodwill_concentration) and #8 cover that side. A negative delta must not flag here.""" cur = _li("2025-12-31", goodwill=60, total_assets=950, revenue=1000) h = [_li("2024-12-31", goodwill=100, total_assets=1000, revenue=1000)] report = assess_accounting_quality(_snapshot(cur, h)) assert not any(f.key == "acquisition_driven_growth" for f in report.flags) def test_acquisition_driven_growth_skipped_without_history(): report = assess_accounting_quality(_snapshot(_li("2025-12-31", goodwill=100), [])) assert "acquisition_driven_growth" in report.checks_skipped_insufficient_data ALL_TESTS = [obj for name, obj in list(globals().items()) if name.startswith("test_") and callable(obj)] if __name__ == "__main__": passed, failed = 0, [] for fn in ALL_TESTS: try: fn() passed += 1 print(f"PASS {fn.__name__}") except AssertionError as e: failed.append(fn.__name__) print(f"FAIL {fn.__name__}: {e}") print(f"\n{passed}/{len(ALL_TESTS)} passed") if failed: raise SystemExit(1)