Eiwa's (TSE:9857) Profits Appear To Have Quality Issues

Eiwa Corporation's (TSE:9857) recent earnings reveal quality issues, with a high accrual ratio indicating lower free cash flow than statutory profits. Despite reporting JP¥1.90b profit, Eiwa burned through JP¥194m in cash last year. The accrual ratio of 0.21 suggests poor cash conversion, raising concerns about the reliability of statutory profits. Shareholders should watch for improved cash flow relative to profit this year. Earnings per share grew 69% over three years, but risks remain, including three warning signs for Eiwa.