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Investment Evaluation Checklist

The investment checklist outlines key factors to consider when evaluating a potential investment, including details of the company's business, products, profitability, competitive advantages, management integrity, financial performance compared to competitors, share price history, and growth strategy. Key metrics to examine include gross and net profit margins, return on assets, return on equity, and the company's ability to generate returns above industry standards and market averages over the long run.

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151 views2 pages

Investment Evaluation Checklist

The investment checklist outlines key factors to consider when evaluating a potential investment, including details of the company's business, products, profitability, competitive advantages, management integrity, financial performance compared to competitors, share price history, and growth strategy. Key metrics to examine include gross and net profit margins, return on assets, return on equity, and the company's ability to generate returns above industry standards and market averages over the long run.

Uploaded by

Trini Magic
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Investment checklist

 Record basic details of company i.e. company name, description,


scope/nature of business etc
 What type of products or services does the business offer? Is it unique? Is it
diversified ? Are there any substitutes? Is it leading in its industry?
 How does the business make money?
 Does the business have a consistent operating history?
 Does the business have favourable long term prospects?
 Is the business able to maintain high competitive advantages over its
competitors?
 Can operations be maintained with minimising expenses?
 Does management demonstrate integrity? Are they candid with shareholders
about organisational programs? (Past evidence of this disclosure)
 Read and compare performance from annual reports of competitors
 How much is the company worth?
 How is it likely to meet future obligations?
 What is the value of the business?
 Is there a high profit margin?
Measurements of profitability and business growth- Gross Profit Margin,
Return on Assets (ROA), Return on Investments (ROI), Return on Equity
(ROE)
 Are profit margins attractive (above industry standard)?
 What is the share price? (Also research its historical trend)
 What major events have impacted the share price, and company
performance? (Negatively and positively)
 Has the company created at least one dollar of market value for retained
earnings?
 Does the company have a historical trend of earnings growth above stock
market average?
 Has the company grown through merger and acquisition?

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