Analytical Integrity

Every metric validated against
published academic research

Dawo's analytical engines don't just compute numbers — every calculation is tested against peer-reviewed academic papers, regulatory standards, and mathematical identities.67 tests across 16 benchmark categories, running continuously.

67
Benchmark Tests
100%
Pass Rate
56
Metrics Validated
16
Academic References

Valuation Quality

External Validation

Are Dawo's Undervalued / Overvalued / Fair assessments reasonable? We cross-reference every valuation against sell-side consensus, price targets, and internal signal consistency.

Computational Accuracy

67 Tests

Every financial metric is validated against its original published academic paper, regulatory standard, or mathematical identity. If a computation deviates from the reference, deployment is blocked.

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Forensic & Earnings Quality

Beneish M-Score8 metrics

8-variable model detecting earnings manipulation. Validated against Enron FY2000 (M = -0.55, correctly flagged).

Validates: Enron flagged as manipulator, healthy companies cleared, all 8 coefficients match published paper
Source: Beneish (1999)Financial Analysts Journal
Piotroski F-Score9 metrics

9-criterion binary scoring system measuring financial strength from balance sheet and income statement signals.

Validates: Strong companies score 9/9, distressed score 0-2, each criterion individually verified
Source: Piotroski (2000)Journal of Accounting Research, 38, pp. 1-41
Accruals & Sloan Ratio2 metrics

Accruals-based earnings quality. Low accruals (CFO >> NI) indicate high-quality, sustainable earnings.

Validates: Negative accruals for quality earnings, positive for low-quality, Sloan ratio hand-computed verification
Source: Sloan (1996)Accounting Review, 71(3)
Cash Conversion & Dilution3 metrics

Cash conversion ratio, receivables-vs-revenue growth divergence, and share dilution tracking.

Validates: Cash conversion > 1.0 for quality earnings, AR/revenue gap detection, dilution tracking
Source: CFA InstituteCFA Level 1 Curriculum: Financial Statement Analysis

Capital Allocation

Buyback, Dividends, ROIC4 metrics

Capital allocation quality signals: buyback yield, dividend sustainability, capex intensity, and ROIC.

Validates: Buyback yield 3% for Apple-like company, dividend sustainability > 4x, ROIC 40-80%
Source: SEC EDGAR XBRLDamodaran sector averages, AAPL FY2023 archetype

Risk Analytics

CAPM Beta1 metrics

Realized beta via Cov(Ri,Rm)/Var(Rm) against textbook CAPM with known analytical solutions.

Validates: 2x leverage = 2.0, constant = 0, self-regression = 1.0, inverse = -1.0
Source: Sharpe (1964)Journal of Finance, 19(3), pp. 425-442
Sharpe & Sortino Ratios2 metrics

Risk-adjusted return computation. Sharpe penalizes all volatility; Sortino only downside.

Validates: Positive Sharpe for winning strategy, Sortino > Sharpe for positive-skew returns
Source: Sharpe (1966), Sortino (1991)Journal of Portfolio Management; Journal of Investing
Maximum Drawdown2 metrics

Peak-to-trough drawdown on cumulative wealth index for portfolio risk monitoring.

Validates: Known price path produces correct drawdown, monotonic increase = 0%, duration tracking
Source: Industry standardWealth path: peak 1.21 -> trough 0.806, DD = 33.4%
VaR & CVaR (Expected Shortfall)2 metrics

Value at Risk and Conditional VaR via historical simulation. CVaR is a coherent risk measure.

Validates: 95th percentile VaR, CVaR (tail average) always worse than VaR
Source: Artzner et al. (1999)Mathematical Finance, 9(3), pp. 203-228
Pearson Correlation1 metrics

Pairwise correlation for portfolio diversification analysis.

Validates: Self-correlation = 1.0, inverse = -1.0, insufficient data handling
Source: Mathematical identityPearson product-moment correlation coefficient

Valuation

DCF Two-Stage Model5 metrics

Discounted cash flow: present value, terminal value (Gordon Growth), sensitivity analysis.

Validates: $1000 at 10% = $909.09, Gordon terminal value, discount rate and growth sensitivity
Source: Damodaran Ch 12, Gordon (1956)Investment Valuation, 3rd ed.; Management Science, 4(1)
Valuation Multiples5 metrics

PE, EV/EBITDA, FCF yield, earnings yield, and PEG ratio computations.

Validates: PE = Price/EPS, EV/EBITDA from components, FCF yield, PEG = PE/growth
Source: SEC EDGAR, Peter LynchXBRL definitions, One Up on Wall Street (PEG methodology)
WACC (Cost of Capital)1 metrics

Weighted Average Cost of Capital via CAPM formula with size premium.

Validates: Basic CAPM formula, size premium for small caps, clamping to 7-18% bounds
Source: Sharpe (1964), DamodaranCAPM Rf=4.2% ERP=5.5%, Ibbotson size premium methodology

Portfolio & Financial Analysis

HHI Concentration Index1 metrics

Herfindahl-Hirschman Index against published DOJ/FTC thresholds for concentration.

Validates: Equal-weight, concentrated, single-stock, DOJ threshold categories all verified
Source: DOJ/FTC (2010, rev. 2023)Horizontal Merger Guidelines: <1500 low, 1500-2500 moderate, >2500 high
Working Capital Metrics3 metrics

Days Sales Outstanding, Days Inventory Outstanding, interest coverage ratio.

Validates: DSO, DIO from known inputs, interest coverage and S&P-style rating categories
Source: CFA InstituteCFA Level 1: Credit Analysis and Working Capital

Cross-Metric Consistency

Inter-Engine Relationships7 metrics

Mathematical identities and relationships validated across different engine computations.

Validates: FCF identity, ROIC-WACC spread, accruals-cash conversion inverse, PE-EY inverse, EV decomposition
Source: Standard financial identitiesFCF=CFO-CapEx, PE*EY=1, EV=MCap+Debt-Cash

Our Methodology

Academic References

Every financial metric is validated against its original published paper. Beneish coefficients match Table 4 of the 1999 paper. CAPM beta matches Sharpe (1964). DCF matches Damodaran Chapter 12.

Continuous Validation

All 67 benchmark tests run on every deployment. If any metric deviates from its published reference value, the issue is flagged immediately.

Edge Case Coverage

Each benchmark tests not just the happy path but adversarial inputs: missing data, zero divisions, extreme values, and boundary conditions that would break naive implementations.

Cross-Metric Consistency

We verify mathematical identities across engines: FCF = CFO - CapEx, PE * Earnings Yield = 1, EV = Market Cap + Debt - Cash. If engines disagree, tests catch it.

Analysis you can trust

Every number is validated against the original academic paper. See the difference yourself.

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