AI.FO SIGNAL LIBRARY
AI.FO reads your accounting data and validates the numbers behind 48 signals before any narrative is written. This is the public view of that library: qualitative and redacted. The exact formulas, the exact thresholds, and your own numbers are the in-app view, behind sign-in.
Not every signal evaluates for every company. Which ones apply depends on that business and on what its data can support; some are labeled proxies and some report as not applicable rather than guess. The library below says so on each signal, plainly, rather than implying all of them fire for everyone.
8 recently added signals, each independently verified before it can publish. Open any one for what it detects, when it fires, and where it does not apply.
For a recurring-revenue business, growth and profitability together are falling short of a widely published benchmark. AIFO adds the company's year-over-year revenue growth rate to its profit margin and checks the combined result against that benchmark line. The premise is that a healthy subscription business can trade growth for profit or profit for growth, but the sum of the two should clear the bar. The signal fires when that combined total sits well below the line, even if one leg is strong: a company can grow fast on a thin or negative margin, or earn well while barely growing, and still come up short on the sum.
For the customers a business already had at the start of a period, their recurring revenue is shrinking rather than holding or growing. AIFO looks only at that existing group and asks whether the money kept and expanded from them outweighs what was lost to downgrades and cancellations. Customers won during the period are deliberately excluded, because new logos can mask an existing base that is leaking. This is a labeled proxy: it can be measured only when revenue can be traced to individual customers over time, and where the books cannot do that, the signal reports not applicable rather than guessing.
For the customer cohort a business already had at the start of a period, its recurring revenue is leaking through pure loss: contraction and outright churn among those existing customers, measured before any credit for expansion from the ones who stayed. A book can post healthy net revenue retention while its gross retention erodes, because upsell to a handful of accounts masks churn across the rest of the base. Gross retention is the read that exposes that leak, because it counts only what the business kept, never what it grew.
The business does not generate enough net operating income to cover its annual debt service (scheduled principal plus interest) with the cushion a commercial lender requires. Debt service coverage is the ratio lenders write into loan covenants, and a reading below the covenant line is a technical breach: the lender can call the loan, freeze the facility, or reprice it, regardless of whether payments are current.
Core operating profitability, EBITDA over revenue, is either sitting below a thin-margin floor or compressing materially year-over-year. EBITDA margin isolates how much of each revenue dollar the business keeps as operating profit before financing costs, taxes, and non-cash charges. A margin that is thin, or that is falling fast, means the business is losing the cushion it needs to absorb a cost shock, service debt, or fund reinvestment.
whether the cash a business is sitting on includes money that was never its own to spend, and whether the balance of that money is growing. Two legs. Leg A reads tax set-aside COVERAGE: an implied income-tax reserve (the disclosed [redacted]% assumption applied to year-to-date pretax profit, net of income tax already paid or accrued, floored at zero) plus the payroll-liabilities and sales-tax-payable balances, measured against unrestricted cash. Leg B reads trust-fund liability BUILD-UP: payroll and sales-tax liabilities rising across consecutive closes by a material amount.
a subscription or prepaid business is drawing down its deferred-revenue liability faster than new bookings and collections replenish it. Deferred revenue is cash a business has already collected for goods or services it has not yet delivered; recognizing that revenue draws the balance back down. When the balance falls across consecutive closes, recognized revenue is being funded by previously-collected cash rather than by new sales. This is a forward liquidity warning: the recognized revenue looks healthy today, but a materially declining deferred-revenue balance means part of that revenue is a drawdown of a finite reserve, and when the reserve runs out, recognized revenue steps down to whatever the current bookings pace supports.
whether what the owner takes out of the business is consistent with what the business generates, read in both directions. Leg A (over-extraction) fires when owner cash out (salary, guaranteed payments, draws, and distributions over a trailing window) runs ahead of the operating cash flow that funds it AND owner equity declined across the same window, so the business is being decapitalized while the profit and loss statement still looks acceptable. Leg B (under-payment) fires when the working owner is paid materially less than the company pays for comparable labor it hires, so reported profit is absorbing an unpriced labor subsidy and the margin the owner manages against is overstated. This is a READ of a relationship between two numbers already in the books: it does NOT opine on reasonable compensation, perform the IRS reasonable-compensation analysis, price equity, value the business, or judge whether a distribution was lawful. The full specification, primitives, and the derivation of every constant live in Part [redacted] under "Owner-Pay Sustainability"; this section is the base-signal summary.
Grouped by what each signal watches. Every card links to a plain-language page for that signal; the exact figures live in the authenticated app.
The business is running low on cash relative to how fast it is spending. AIFO reads the cash in the bank against the pace at which cash is actually leaving each month, after netting whatever is coming in. It measures the usable cash above a basic operating buffer, not the headline balance, because some cash must always stay behind to cover payroll and normal operations. The result is how many months the business can keep operating before that usable cash runs out.
Total spending is climbing meaningfully faster than net cash burn, which means growing revenue is currently hiding a rising cost base. Gross burn is everything going out the door; net burn is what is left after the money coming in. Comparing the start and end of the period, gross burn has climbed faster than net burn, so the gap between the two has widened across the window. That divergence means costs are decoupling from revenue. The danger is that the calm headline net number masks spending that is not calm at all.
Multiple hypothetical stress scenarios produce emergency-level runway.
The company's stated burn rate doesn't match what's actually happening in the bank.
The business fails multiple independent stress scenarios, indicating low resilience to adverse events.
Customers are taking longer to pay their invoices, so cash the business has already earned is stuck sitting in receivables. AIFO reads how many days of sales are tied up in unpaid invoices and whether that number is drifting upward over time. It watches both the current level and the trend, because either a high level or a steady climb is a problem. The work is done and booked as revenue, but the cash has not arrived.
The overall time from spending cash on delivery to collecting it from clients is lengthening.
Core operations are not generating enough cash to cover near-term obligations.
The company is paying vendors increasingly late, a behavioral indicator of cash stress.
The business's short-term financial cushion has thinned over the period. AIFO reads the relationship between what the business owns that is due to become cash soon and what it owes in the near term, and compares the start and end of the window: when both the working-capital balance and the current ratio are lower at the end than at the start, the buffer that covers near-term obligations has shrunk. It is a slow-moving signal that often precedes an acute cash squeeze.
The stated revenue growth plan requires more working capital than is available without crossing the liquidity floor.
A single client makes up a disproportionate share of total revenue, which creates an existential dependency on one relationship. AIFO reads how much of the business rides on its largest customer. The higher that share climbs, the more the entire company's health is tied to one account's decisions. The concern is not the client itself but the fragility of leaning on it so heavily.
Top client share is increasing over time, concentration is getting worse, not staying stable.
Project-based AR (lumpier, slower to collect, lower margin) is growing as a share of total AR.
For the customers a business already had at the start of a period, their recurring revenue is shrinking rather than holding or growing. AIFO looks only at that existing group and asks whether the money kept and expanded from them outweighs what was lost to downgrades and cancellations. Customers won during the period are deliberately excluded, because new logos can mask an existing base that is leaking. This is a labeled proxy: it can be measured only when revenue can be traced to individual customers over time, and where the books cannot do that, the signal reports not applicable rather than guessing.
For the customer cohort a business already had at the start of a period, its recurring revenue is leaking through pure loss: contraction and outright churn among those existing customers, measured before any credit for expansion from the ones who stayed. A book can post healthy net revenue retention while its gross retention erodes, because upsell to a handful of accounts masks churn across the rest of the base. Gross retention is the read that exposes that leak, because it counts only what the business kept, never what it grew.
Gross margin is eroding while delivery costs, especially contractors, are climbing much faster than revenue. Comparing the start and end of the period, contractor spend has outpaced revenue by a wide margin, and that holds whether revenue rose slowly, stayed flat, or fell. AIFO watches the margin trend alongside the pace of contractor spend to catch a cost base pulling away from what the work brings in. Each unit of work earns less even as more is spent to deliver it.
Revenue mix is shifting toward lower-margin project work, reducing the blended profitability of the business.
Total labor (payroll + contractors), or payroll alone, is consuming too large a share of current revenue. S14 fires on that present share (payroll alone above its level, or total labor above its higher line). On the books-derived path it then enriches the fired finding with trajectory analysis (hiring freeze impact, payroll cliff timing, revenue-per-FTE trajectory), so the memo shows where labor is heading as well as where it stands; on the founder-supplied direct path (Track D), those trajectory enrichments are absent and only the labor-share and source metrics are emitted. The trajectory analysis contextualizes a fired signal; it is not what triggers it. For the lower-threshold point-in-time read see S36, and for the forward payroll-cliff projection as its own trigger see S39.
Total operating costs are consuming a growing share of revenue, cost discipline is eroding.
The company's pre-tax profit margin is declining year-over-year, organic profitability is weakening.
Monthly spending is materially above the operating budget.
Revenue generated per employee is declining as headcount grows faster than revenue.
The same expense categories are over budget across consecutive months, indicating structural, not one-time, variance.
The current-month labor-to-revenue ratio is above the [redacted]% threshold, a point-in-time measurement of labor cost pressure.
At current payroll growth rates, payroll will hit the [redacted]% critical ceiling within [redacted] months.
For a recurring-revenue business, growth and profitability together are falling short of a widely published benchmark. AIFO adds the company's year-over-year revenue growth rate to its profit margin and checks the combined result against that benchmark line. The premise is that a healthy subscription business can trade growth for profit or profit for growth, but the sum of the two should clear the bar. The signal fires when that combined total sits well below the line, even if one leg is strong: a company can grow fast on a thin or negative margin, or earn well while barely growing, and still come up short on the sum.
Software and subscription spending has grown materially over the trailing window, or there are overlapping tools in the same category.
A single vendor accounts for a large share of vendor spending, creating supply-chain concentration risk.
The business has available debt capacity it's not using while cash is getting tight.
The business needs more capacity (utilization is high) but doesn't have enough cash buffer to safely add a headcount.
The company is spending too little on capital assets relative to its revenue, risking deterioration of its delivery infrastructure.
Cash is tightening and DPO is rising, creating a window to renegotiate vendor terms from a position of relative strength before vendors notice the strain.
The business does not generate enough net operating income to cover its annual debt service (scheduled principal plus interest) with the cushion a commercial lender requires. Debt service coverage is the ratio lenders write into loan covenants, and a reading below the covenant line is a technical breach: the lender can call the loan, freeze the facility, or reprice it, regardless of whether payments are current.
Core operating profitability, EBITDA over revenue, is either sitting below a thin-margin floor or compressing materially year-over-year. EBITDA margin isolates how much of each revenue dollar the business keeps as operating profit before financing costs, taxes, and non-cash charges. A margin that is thin, or that is falling fast, means the business is losing the cushion it needs to absorb a cost shock, service debt, or fund reinvestment.
whether the cash a business is sitting on includes money that was never its own to spend, and whether the balance of that money is growing. Two legs. Leg A reads tax set-aside COVERAGE: an implied income-tax reserve (the disclosed [redacted]% assumption applied to year-to-date pretax profit, net of income tax already paid or accrued, floored at zero) plus the payroll-liabilities and sales-tax-payable balances, measured against unrestricted cash. Leg B reads trust-fund liability BUILD-UP: payroll and sales-tax liabilities rising across consecutive closes by a material amount.
a subscription or prepaid business is drawing down its deferred-revenue liability faster than new bookings and collections replenish it. Deferred revenue is cash a business has already collected for goods or services it has not yet delivered; recognizing that revenue draws the balance back down. When the balance falls across consecutive closes, recognized revenue is being funded by previously-collected cash rather than by new sales. This is a forward liquidity warning: the recognized revenue looks healthy today, but a materially declining deferred-revenue balance means part of that revenue is a drawdown of a finite reserve, and when the reserve runs out, recognized revenue steps down to whatever the current bookings pace supports.
whether what the owner takes out of the business is consistent with what the business generates, read in both directions. Leg A (over-extraction) fires when owner cash out (salary, guaranteed payments, draws, and distributions over a trailing window) runs ahead of the operating cash flow that funds it AND owner equity declined across the same window, so the business is being decapitalized while the profit and loss statement still looks acceptable. Leg B (under-payment) fires when the working owner is paid materially less than the company pays for comparable labor it hires, so reported profit is absorbing an unpriced labor subsidy and the margin the owner manages against is overstated. This is a READ of a relationship between two numbers already in the books: it does NOT opine on reasonable compensation, perform the IRS reasonable-compensation analysis, price equity, value the business, or judge whether a distribution was lawful. The full specification, primitives, and the derivation of every constant live in Part [redacted] under "Owner-Pay Sustainability"; this section is the base-signal summary.
Revenue is growing but DSO is deteriorating, the company is effectively financing its own clients' cash cycles.
Margins are compressing while utilization is already maxed, there is no operational lever to escape the problem.
Multiple constraints are converging simultaneously, the business is losing the freedom to make strategic moves.
A combination of immediate liquidity risks creates a scenario where multiple failure modes can activate simultaneously.
Payroll is growing faster than revenue while hiring capacity is already constrained.
Revenue is growing, but gross margin is compressing at the same time: pricing has not kept pace with the cost structure, so each new dollar of revenue is worth less than the last.
The most severe composite, cascading liquidity failure, payroll cliff, and multiple stress scenario failures all converging.
Revenue is growing but each new dollar of growth destroys value, the growth itself is making the business worse.
Fixed-asset stock relative to annual revenue falls outside the healthy PS benchmark band, signaling either under-investment in delivery infrastructure or capital tied up in assets relative to revenue. C9 is a balance-sheet stock variant of the same investment-adequacy concept S32 measures on a P&L flow basis.
Multiple distinct cost-efficiency problems are firing simultaneously, indicating that cost-per-output is deteriorating across several surfaces at once rather than as a single isolated issue. C10 is a multi-signal aggregation; it reads the firing state of four base signals and fires when at least [redacted] of them are active.
Every signal traces to a published methodology, and an independent, fail-closed verifier re-runs the engine every night before anything ships. See the nightly proof page for the standing coverage guarantee, or how verification works for the path a number takes before it reaches a founder.
Prose fields are free of digits (methodology tags excepted), word-form magnitudes, and constant names; identifiers, enums, and constant names are shape-validated; formula, severity tiers, exact threshold values, manual-calculation steps, precise applicability blocks, and full source citations are omitted, leaving only authored qualitative summaries.