Investment decision list.

(Companies stability over time, company trends, economic environment, company

environment)

 Companies’ stability

- Earnings and revenue growth (you want to know the bottom line, is the company
making profits and are these profits growing. Is it boosting its sales? Can use a
company’s earnings and revenue to compare it to the stock price to see if its
expensive or reasonable.) HOW TO DO IT – look at a company’s balance sheets
and income statements and add up the data from the last four quarters. As well as
the previous periods to see the change from previous years.
- Cash flow trends ( when net income is higher than cash flow you need to be aware
and need to know why
- Debt Load ( debt is fine as long as enough cash flow is generated to support the
debt, examine the balance sheet and income statement, start with balance sheet
showing amount of debt. Want to look at a companies interest expenses on the
loan and compare that to a companies income before tax and interests.
- Sales ( are people buying the product, is it increasing)
- Look at profit margins and compare it with other firms in the same industry.
- Look at the free cash flow, the amount of cash on hand after all expenses are met.
Cash is king.
- Accounts receivable turnover shows how quickly your able to collect payments.
 Economic environment.
- Gov policies
- Central bank interest rates
- Inflation rate
- Economic stability
- GDP per capita
- Housing market
 Company environment
- See if there is any negative news about the company.