I’m going to post a pdf of spreadsheet I have adapted* which I use to quickly evaluate companies. This baby looks at a company’s numbers and scores them according to a number of criteria to do with profitability, cash flow, operating efficiency etc. In total there are 13 tests and anything scoring 10 or above is a company worth following in my book. Now this doesn’t mean that I will automatically buy the company, it just means that I will put it on my watchlist and buy it when it becomes cheap enough. This is because investing does not involve only picking good companies, it also involves buying and selling them at the right time. Also please note that this test does not look at the external environment which is essential to determine growth prospects. However they provide a quick way of weeding out weak companies and identifying strong ones so that you can spend more of your time researching good companies.
I will post these up every now and then when I find a company which scores 10 or above and add it to my watchlist.
*from Harry Domash’s book “Fire your Stock Analyst” (he calls is a ‘fiscal fitness’ test)
