To: bruwin who wrote (4683 ) 7/3/2025 9:21:21 AM From: E_K_S Read Replies (1) | Respond to yes, Perplexity scans multiple data sources. I need to see if GROK provides that.SMCI (Super Micro Computer) F-Score and Financial Integrity Review Current F-Score: The Piotroski F-Score for SMCI as of July 2025 is reported as either 4 or 5 , depending on the data provider. This is a middling score (on a scale of 0–9), suggesting average financial health and some caution for value investors.Past Scandal: SMCI was fined $17.5 million by the SEC in 2020 for “prematurely recognizing revenue and understating expenses,” a practice known as channel stuffing. The former CFO was held responsible, and the CEO was required to reimburse $2.1 million in stock profits under Sarbanes-Oxley rules. SMCI was previously delisted due to these issues.Inventory Reserve Adjustments: In the fiscal year ending June 30, 2024, SMCI’s inventory reserve was 1.9% of total inventory ($4.33 billion), up from 2.1% the previous year. Notably, the reserve more than doubled compared to preliminary estimates, with a $45 million adjustment made after the audit. This suggests the company’s new auditor, BDO LLP, found incorrect inventory valuation, prompting a significant adjustment.Critical Audit Matter (CAM): The 2024 audit opinion flagged inventory valuation as a “critical audit matter,” highlighting the complexity and subjectivity in management’s estimates. This area required especially challenging auditor judgment, indicating ongoing risk in inventory accounting.No Recent Restatements: The 2025 10-K confirmed there was no restatement, but experts note that “no restatement does not mean there were no errors.” The company expanded its inventory disclosures, likely in response to auditor and regulatory scrutiny.Preliminary vs. Final Results: There have been notable differences between preliminary and final financial results, especially regarding inventory reserves, which may raise questions about the reliability of initial management estimates.No Direct Evidence of Fraud: There is no direct evidence of renewed fraudulent activity or intentional misstatement as of 2025. However, the flagged audit issues, significant inventory adjustments, and the company’s history mean that investors should remain vigilant.Areas to Watch: Inventory Valuation: The most recent audit identified this as a high-risk area.Management Estimates: The subjectivity and complexity in inventory accounting could be exploited if not carefully monitored.Transparency: The company has increased disclosure, but the need for large post-audit adjustments is a red flag for some analysts.Piotroski F-Score was typically around 4 . This is considered a middling score, not indicating strong financial health but also not flagging severe distress.not reflect or flag the underlying accounting manipulation at the time. The Piotroski F-Score is based on publicly reported financial data and does not account for fraudulent or manipulated figures unless those issues become visible in the reported numbers. As a result, the F-score remained in the average range even as the company was engaging in deceptive practices like premature revenue recognition and channel stuffing .the F-score is not designed to detect fraud or aggressive accounting unless it materially distorts the reported financials . In SMCI’s case, the accounting issues were only revealed after regulatory investigations and restatements, not by the F-score itself
