Soft pass
A report flag indicating the company passed our quality gate but with a yellow card on a specific quality metric — most often OCF/NI < 0.8 or working-capital deterioration.
A soft pass is a quality-gate outcome between a clean pass and a hard fail. It indicates the company is not disqualified from a buy recommendation, but a specific quality metric is flashing yellow and requires explicit reconciliation in the report. The most common soft-pass triggers are OCF/NI conversion below 0.8 (earnings not converting to cash), working-capital deterioration (rising receivables or inventory intensity), accruals ratio above the 10% gate threshold, and tax-rate anomalies that flatter reported net income. A soft pass widens the required margin of safety by approximately 5 percentage points and triggers an explicit footnote in the rating discussion explaining the source of the yellow card and why we believe the issue is transient or structural. A soft-pass stock can still earn a buy rating; a hard-fail stock cannot, regardless of valuation cheapness.