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I am new to investing and just started practising on a simulator. I wrote a program on Matlab and to analyse various fundamental aspects of a company. These are the aspects computed my program,

A. Income statement

  1. Revenue growth % (each year for last 5 yrs and each quarter for last 5 quarters)
  2. Cost of revenue growth % (each year for last 5 yrs and each quarter for last 5 quarters)
  3. Operating income growth % (each year for last 5 yrs and each quarter for last 5 quarters)
  4. Net income growth % (each year for last 5 yrs and each quarter for last 5 quarters)
  5. Total operating expense growth % (each year for last 5 yrs and each quarter for last 5 quarters)
  6. Gross profit margin % (each year for last 5 yrs and each quarter for last 5 quarters)
  7. Operating profit margin % (each year for last 5 yrs and each quarter for last 5 quarters)
  8. Net profit margin % (each year for last 5 yrs and each quarter for last 5 quarters)

B. Balance sheet

  1. Cash. Eq growth % (each year for last 5 yrs and each quarter for last 5 quarters)
  2. Longterm debt growth % (each year for last 5 yrs and each quarter for last 5 quarters)
  3. Total equity growth % (each year for last 5 yrs and each quarter for last 5 quarters)
  4. Working capital % (each year for last 5 yrs and each quarter for last 5 quarters)
  5. Total accounts receivable growth % (each year for last 5 yrs and each quarter for last 5 quarters)
  6. Total accounts payable % (each year for last 5 yrs and each quarter for last 5 quarters)
  7. Total inventory growth % (each year for last 5 yrs and each quarter for last 5 quarters

C. cashflow Statement

  1. High quality earnings growth % (each year for last 5 yrs and each quarter for last 5 quarters
  2. Free cashflow growth % (each year for last 5 yrs and each quarter for last 5 quarters
  3. Company lifespan growth % (each year for last 5 yrs and each quarter for last 5 quarters

D. Discounted cash flow to determine if the stock is cheap (projected to 5 years)

So my question is with all these information and plots, how does one decide whether or not to invest in a company. Some of these aspects are positive for some companies and negative for some others. It is also worth noting that penalising a company just because of a few negative aspects are erroneous. I was thinking of a implementing a points systems to assist my decision. Any thoughts on this?

closed as primarily opinion-based by Dheer, Nathan L, JoeTaxpayer Feb 13 '17 at 22:15

Many good questions generate some degree of opinion based on expert experience, but answers to this question will tend to be almost entirely based on opinions, rather than facts, references, or specific expertise. If this question can be reworded to fit the rules in the help center, please edit the question.

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The degrees to which a positive is positive and a negative is negative are up to you. There is no correct answer.

A couple points of caution:

  • You're never checking the company's market cap/share price or deriving what you deem to be a "fair value", only whether or not some data points have grown.
  • It's not uncommon for one time charges to weigh on parts of a company's income statement or balance sheet.
  • It's not uncommon for some part of a balance sheet/income statement to be recategorized
  • Mergers, acquisitions and divestitures would also need a critical eye to determine they're impact to a company's finances and future prospects

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