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A Thread on checklists to analyse a business based on @Gautam__Baid's book #TheJoysofCompounding
The book has explained the terms in a easy to understand language with less jargons. This thread is an attempt to summarise it.
The book has explained the terms in a easy to understand language with less jargons. This thread is an attempt to summarise it.
1. INCOME STATEMENT
Sales Growth:
- Higher is better
- High sales growth with no profitability = ×××
- Organic growth driven by internal accruals = ✓
- High growth driven by big-ticket acquisitions = Caution!
Sales Growth:
- Higher is better
- High sales growth with no profitability = ×××
- Organic growth driven by internal accruals = ✓
- High growth driven by big-ticket acquisitions = Caution!
Gross Profit Margin(GPM):
- Focus on trend over the years
- Fluctuating cyclically = No pricing power
- High & stable = Possibility of economic moat
Interest Income (usually shown as other income):
- Should be atleast equal to Bank FD returns
- Focus on trend over the years
- Fluctuating cyclically = No pricing power
- High & stable = Possibility of economic moat
Interest Income (usually shown as other income):
- Should be atleast equal to Bank FD returns
"More important than the will to win is the will to prepare." - Charlie Munger
#thejoysofcompounding
@Gautam__Baid
#thejoysofcompounding
@Gautam__Baid
"Rich people have small TVs and big libraries. Poor people have small libraries and big TVs." - Zig Ziglar
People who engage in mentally stimulating activities like reading experience slower memory decline than those who do not.
@AANMember
@AANMember
