Operating Leverage = % change in EBIT / % change in Sales. Values >1 indicate high fixed-cost structure; >3 signals significant operational leverage.
Sales → Operating Profit via OPM% → +Other Income → −Interest − Depreciation → PBT → −Tax → PAT → EPS = PAT / Shares
Projects future EPS using a sustainable growth rate = ROE × Retention Ratio. Calculates an estimated future price at a given exit P/E, then discounts back to estimate required CAGR / present-day intrinsic value.
Given estimated profit CAGR and an exit P/E multiple, this model calculates the implied future market cap and discounts it back to derive the expected CAGR return from the current price.
Uses Free Cash Flow (CFO − Capex) as the base. FCF grows at Phase 1 rate for Years 1–5 and Phase 2 rate for Years 6–10, then applies a terminal value at a stable growth rate.
Graham Number: √(22.5 × EPS × Book Value per Share). Represents a conservative upper price bound for a defensive investor. Max acceptable P/E × P/B = 22.5.
EPV (Earnings Power Value): Adjusted EBIT × (1 − Tax) / WACC. Values a company at zero growth — pure earnings power capitalized at WACC. A strict floor / margin of safety test.
Graham Revised (2023): EPS × (8.5 + 2g) × (4.4 / AAA Bond Yield), where g = estimated 5yr EPS CAGR.
Works backward from the current market price to determine what the market is implying. Uses a reverse Gordon Growth / reverse-DCF approach: at the current MCap, what revenue growth rate, margin, and capital efficiency must the company achieve for the investor to earn their hurdle rate?
9 binary signals across 3 pillars: Profitability (4 points), Leverage/Liquidity (3 points), Operating Efficiency (2 points). Score ≥ 7 = Financially Strong, 4–6 = Neutral, ≤ 3 = Weak. Automatically calculated from parsed data.
Z' = 6.56(WC/TA) + 3.26(RE/TA) + 6.72(EBIT/TA) + 1.05(Equity BV/Total Liabilities). Safe Zone > 2.6, Grey Zone 1.1–2.6, Distress < 1.1. Uses Book Value of equity (not market value) for more conservative non-financial-company assessment.
ROE = Net Profit Margin × Asset Turnover × Equity Multiplier (Financial Leverage). Decomposing ROE reveals the true driver: Is the company profitable (margin-driven), efficient (asset-turnover driven), or leveraged (debt-driven)?
CCC = Debtor Days + Inventory Days − Payable Days. A rising CCC means cash is getting trapped; a falling CCC signals improving operational efficiency and pricing power. Track trends across 10 years to identify structural shifts before they appear in revenue.
The ultimate test of management quality: Did stock price growth track earnings growth? If earnings grew 20% CAGR but the stock grew only 5%, the company destroyed value through poor capital allocation, excessive dilution, or multiple compression. Conversely, if the stock massively outpaced earnings, evaluate whether current valuation is justified.
Maps Free Cash Flow to its three destinations: Reinvestment (Capex above maintenance), Returns to shareholders (Dividends + Buybacks), and Cash accumulation. Consistent reinvestment at high ROIC is the hallmark of a quality compounder.
Check each item that applies. Green = positive signal, Red = red flag. Score = % of positive checks.