Rectitude Holdings' (NASDAQ:RECT) Earnings Are Weaker Than They Seem

Rectitude Holdings' recently reported strong earnings, but a detailed analysis reveals some concerning aspects. The company's high accrual ratio of 0.25 indicates that a significant portion of its profit is not backed by free cash flow, with an outflow of S$2.4m despite a statutory profit of S$3.59m. While EPS grew by 56% in the last year, the discrepancy between reported profits and actual cash flow suggests that underlying earnings power might be weaker than initially perceived.