Forensic scores that look for accounts flattered by accounting, models that ask what growth a price already assumes, yardsticks for companies that make no profit yet, and the capital rules that decide how far a bank can grow.
Is It Cheap? · A great company can still be a poor buy at the wrong price. These compare the price with profits, sales, cash and the company's own history.
Enterprise value ÷ free cash flow, the cash left after the company pays to maintain and grow its assets.
What the company would be worth if its profits never grew again, compared with today's price. Positive means the price is below that no-growth value.
Benjamin Graham's 'net-net' test: current assets (cash, receivables, stock) minus all liabilities, compared with market cap. Positive means the whole company costs less than that amount.
How far the price could move to reach a fair value from a PEG-style model that also gives credit for business quality.
A fair P/B worked out from the company's return on equity (higher returns deserve a higher P/B), compared with today's P/B. Positive means room to rise.
A model estimates the P/E a company would normally get for its growth, return on equity and size. Positive means it trades cheaper than that.
Price / sales ÷ sales growth. Like PEG, but with sales instead of profit.
Is It Well-Run? · Returns on capital show how much profit the business makes from every rupee put into it.
Gross profit (sales minus the direct cost of what was sold) ÷ total assets.
Operating profit ÷ the assets the business needs to run, after taking out what suppliers and customers fund for it.
How Fast Is It Growing? · Growth in sales and profit over different periods, from the latest quarter to 15 years.
How fast the company can grow using only its own profits, without new debt or new shares: return on equity × the share of profit it keeps.
Actual growth ÷ sustainable growth rate. Above 1 means the company is growing faster than its own profits can pay for.
Debt Check · Borrowing helps a business grow, until a bad year makes the interest hard to pay.
Goodwill, the premium paid above book value in past acquisitions, as a share of equity.
Another bankruptcy-risk model, using size, debt, profits and cash. Above 0 means more than a 50% modelled chance of distress.
Past Performance · Price returns over different periods. Useful context, never a forecast.
How much the share price grew each year, on average, over 22 years, not counting dividends.
How It Spends Money · Whether the money the company puts back into the business pays off.
Extra operating profit earned ÷ extra capital invested over 3 years: the return on the new money put in.
The change in operating profit ÷ the change in capital employed over 3 years.
RoCE divided by sales growth. It weighs how well the company earns against how fast it grows.
Is It Trustworthy? · Forensic checks for accounts that look better than the business really is.
A score from 8 accounting ratios that estimates whether profits may have been inflated.
Counts 0 to 6 signs that accounts look better than the business, such as profit rising while cash flow falls, or receivables piling up.
Groups companies into 5 bands by how much of their profit is backed by cash: 1 is best backed, 5 least.
Banks and Lenders · A bank's raw material is other people's money, so the ratios that judge a factory misread it. These are the figures that matter for banks, NBFCs and housing finance companies: what they earn on lending, how many loans have gone bad, how well they are cushioned against losses, and how cheaply they fund themselves.
Common equity tier 1: the lender's purest capital, its share capital and retained profits, as a share of risk-weighted assets.
Our Valuation · Valarth values each company with several models and compares the result with today's price and with the company's peers. These figures say what that work concludes and how much weight it can bear.
The yearly revenue growth, over the next ten years, at which our cash-flow model is worth exactly today's share price.
What the company would be worth if its profits never grew again, compared with today's price. Known as earnings power value.