Check List For Investing In A Company

 Before making investments in stock following factors may help you to take decisions. These factors definitely provide the logical basis before taking further step. It’s very simple what you have to do is to answer the question for each factor. After answering all the questions you will get the understanding of company i.e. its business and the opportunity.

Business:

·        Is the business is simple and understandable?

·        Does the business have consistent operating history?

·        Does the business have Favorable Long Term prospects?

Management:

·        Is Management Rational?

·        Is management candid with its shareholders?

·        Does Management Resist the institutional imperative?

Financials:

·        What is the return on equity?

·        What are the profit margins?

·        Has the company created at least a dollar of market value for every dollar retained?

·        What are the company’s owner Earnings?

Value:

·        What is the value of company? (At what price you will purchase the business)

·        Can it be purchased at a significant discount to its value? (i.e. whether margin of safety exists or not)