We go through 20 must know balance sheet ratios.
Each one of these ratios should be in your arsenal for any fundamental analysis and interpretation.
Understand how topics like solvency ratios, Cash Conversion Cycle, and Debt-Equity ratios play a role in determining the health of a business.
Free download also available as a companion to the article.
A breakdown of changes in working capital. How Buffett defines it and how to use it for valuation. Includes a free spreadsheet download to complement the article.READ MORE
A guide to understand and interpret the financial statements. Discusses how Warren Buffett uses it to identify stocks and moats. Refer to the table at the end that summarizes the entire discussion.READ MORE
A stock portfolio tracker using Google Drive with advanced functions than your average tracker. Get it for yourself.
A project that I’ve always had, was to improve on my stock portfolio tracking spreadsheets.
During this time, I’ve probably used 10 or so different portfolio trackers, but nothing met my needs. I don’t do complicated transactions, but still, nothing could really satisfy me.
But those four long years have passed, and I believe I finally have a version that will serve my needs and fulfill its purpose for a long time.
Financial ratio analysis has come a long way. The US stock market and the businesses in USA are superb because of the transparency offered to investors.
It is not perfect, but compared to the rest of the world, the access to financial statements and thus the variety of financial ratios that you can crunch is world class.
With that, I want to go through 20 balance sheet ratios to help you determine the financial health of a company. These balance sheet ratios can be applied to both the public and private sector.
Today is the day the dust on the topic of changes in working capital finally settles.
Read this page slowly, and download the worksheet to take with you because the whole topic of changes in working capital is very confusing. Spreadsheet includes examples, calculations and the full article.
It’s taken a lot of thought over many years to fully understand this idea of what the “change” in changes in working capital actually means and how it should be applied to valuation and financial analysis.
Learn how to value stocks using a simple formula created by Ben Graham. A quick way to estimate the range of a stock for value investors using growth numbers. Download the companion Graham formula spreadsheet.
Can you really discover below average prices companies? Joel Greenblatt thinks so. He believes that using his magic formula can help you find above average companies using 6th grade math.
Get insights into how Buffett would analyze financial statements.
Excerpt below from Warren Buffett’s 2000 letter to shareholders. Emphasis added.
Leaving aside tax factors, the formula we use for evaluating stocks and businesses is identical. Indeed, the formula for valuing all assets that are purchased for financial gain has been unchanged since it was first laid out by a very smart man in about 600 B.C. (though he wasn’t smart enough to know it was 600 B.C.).
Here are the rules for the portfolio.
No changes until end of the year, UNLESS a company is bought out and needs to be replaced.
20 stocks @ $5k each for a $100k portfolio
A grade stocks (but can include B if not enough A’s)
No OTC stocks due to many people not wanting or being able to buy them (nothing wrong with OTC stocks though)
2016 was the first year our Old School Value Action Score that you see on the Old School Value stock analysis software took to the streets.
What is an “Action Score”?
In a nutshell, it’s a set of 9 (mostly value based) metrics used to score a stock between 0-100. Stocks are then graded based on their scores.
The #1 goal of the Action Score is to reduce the time spent trying to find ideas.
If you believe in the 80/20 rule, you’ll see that you tend to spend 80% of your time looking for stocks. Less (much less) than 20% of the time is spent on analyzing, thinking, valuing and learning about companies.
The #2 goal of the Action Score is to utilize a mix of uncommon metrics and fundamentals to create a quantitative strategy for people who are short on time, yet enjoy the DIY investing approach.
Results are in.
First, I’ll be going over results of the free value stock screeners and then in a few days, I’ll post the results of the Action Score with a breakdown of how each grade did.
I’m also excited to share a report later this month where the Action Score was independently tested to verify the accuracy and expected returns of the Old School Value Action Score.
In 1932, Ben Graham became a freelance writer for Forbes during the bottom of the Great Depression.
Talk about timing.
With the economy sinking, it would have been tough to write about stocks will go back up. But true to form, in the middle of crashes and people’s accounts getting wiped out, Graham wrote about why the market was cheap with a healthy dose of common sense and objectivity.
An explanation of the Action Score: How the Action score is created using Q,V,G factors; What metrics make up Q,V and G; backtested results showing 20% CAGR over 17 years. Plus a free download of the top 50 Action Score Stocks.
The crowd of companies in this section [Manufacturing, Service and Retailing Operations] sells products ranging from lollipops to jet airplanes. Some of these businesses, measured by earnings on unleveraged net tangible assets, enjoy terrific economics, producing profits that run from 25% after-tax to far more than 100%. Others generate good returns in the area of 12% to 20%. A few, however, have very poor returns, a result of some serious mistakes I made in my job of capital allocation. I was not misled: I simply was wrong in my evaluation of the economic dynamics of the company or the industry in which it operated.
—Warren Buffett, Letter to Shareholders 2013
Download 3 free stock calculator spreadsheets following the methods we use for our DCF, Grahams Formula and DuPont Analysis.
Understand the value of a stock as well as a deeper dive into how ROE is calculated.
Download a PDF of an independent study performed to validate and evaluate the performance of our Action Score Stock Grading and Valuation tool. Statiscal data with easy to understand explanations on how to interpret the data. See how the stock grading system works and leverage the work to pick winning stocks.
See how you can leverage the Old School Value stock grading and valuation tool to achieve market beating returns to generate a bigger portfolio. We disclose the 2016 performance and disclose how to piggyback our proven scoring and ratings system.
Enjoy our various list of value focused, free pre-defined stock screens.
Based on the ideas of Graham, Buffett, Greenblatt and other strategies.
A recommended reading list for anyone interested in fundamental analysis and value investing.
Each book is categorized into difficult.
9 value investing blogs that we highly recommend.
Excellent quality with a focus on education.
If you are running low on ideas of want to jumpstart your idea brain, check out these sites.
We have collected the best sites that offer quality stock ideas without any sales or being pushy.
From books, to websites, to podcasts, newsletters and more, we list the 60 best investing resources related to value investing you would be crazy to miss.