How to Get the Right stock?

3.2.1 Analyze Financial Track Record of a Company

A company is worth investing in, if it is profitable, and is capable of increasing its profitability at a good consistent rate.

To grow its profits, a company must be able to grow its Net Sales year after year. The company can achieve it by increasing capacity in existing infrastructure; & by expanding its business in the long run.

Any kind of expansion will need funds, and company can arrange it by

Reinvesting a part of its profits in the business
Issuing new shares, &
Borrowing money from banks

This investment is reflected by an increase in the Book Value of the company.

Company should utilise its capital efficiently. An investor / shareholder can check it by monitoring the Return on Total Invested Capital.

A good Company should borrow only so much money that it can repay without any serious difficulty. The Debt to net Profit ratio tells us how many years a company will take to repay its debt. If it's very high we need to investigate closely.

Thus, we have 5 necessary and sufficient financial factors that speak about a company's performance.

	Financial Factor	Measure of
1	Net Sales	Revenue generated from sales of products and services
2	ROCE	Efficiency of using money, shareholders' and borrowed
3	EPS	Profit per share
4	BVPS	Reinvestment done to increase its capacity
5	Net Op. Cash Flow	Cash generated from operation
6	Debt/Net Profit Ratio	Number of years a company can take to repay its debt

To know a company's real strength, we need to study the company's performance through a full economic cycle, thro' good and bad times. So, we need to evaluate a company on above factors for a period of 10 years.

The 10 YEAR X-RAY designed by MoneyWorks4me will help to assess a company's financial track record with ease. Click on the link to know more.

This is how the 10 YEAR X-RAY of a company on MoneyWorks4me looks-

Let us understand how MoneyWorks4Me has come up with the colour coding for the following-

Financial Factor	Assessment of Colour Coding
Year-On-Year growth rates of Net Sales, EPS, Net Op. Cash Flow and BVPS	In the last ten years, Inflation in India has been growing at a CAGR of around 6%. So, we put our lower limit as twice that at 12% as good consistent growth and code it green as reflected in the 10 YEAR X-RAY. If the growth rate is 8-12% which just covers the inflation the company is considered somewhat good and is coded orange. A growth rate below 8% is considered not good and is coded red.
ROCE	We must maintain a return on total investment more than that on other investment options. In India, return on a 10-year fixed deposit is 8-10%; so we keep our benchmark for very good ROCE as a minimum 12% every year for 10 years and code it as green as reflected in the 10 YEAR X-RAY. If it is 8-12% which is similar to returns obtained with other Investment options; the company is considered somewhat good and is coded orange. ROCE below 8% is considered not good and is coded red.
Debt/Net Profit ratio	A good company should borrow only so much money that it can repay without any serious difficulty. We think a company should pay all its debt within 3 years. Hence, we keep our benchmark for very good Debt/Net profit between 0-3 for the current year and code it as green. The ratio greater than 3 or less than 0 have been coded as orange; indicating that we need to study the company further.

SEBI Registered: Investment Adviser - INA000013323 RIA Details

Name of the IA registered with SEBI:	The Alchemists Ark Pvt. Ltd.
Logo:
Trade/Brand Name of IA:	MoneyWorks4Me Investment Advisers
Brand Logo:
SEBI Registration Number:	INA000013323 Validity - May 16, 2019 - Perpetual
BASL Membership ID:	BASL1187
Address	B-101, Signet Corner Building, Balewadi Phata, Baner, Pune, Maharashtra 411045
Compliance officer Details:	Name: Shrikant Jagtap Email: shrikant.jagtap@moneyworks4me.com Telephone: +919860359463 Address: Same as IA
Grievance Officer Details:	Name: Mukta Vaze Email: mukta.vaze@moneyworks4me.com Telephone: +91 98609 19463 Address: Same as IA
Principal Officer Details:	Name: Atharva Bhide Email: atharva.bhide@moneyworks4me.com Telephone: +91 91758 99463 Address: Same as IA
Standard Warning:	Investment in securities market are subject to market risks. Read all the related documents carefully before investing.
Disclaimer:	Registration granted by SEBI, membership of BASL and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.

Warning: Investment in securities market are subject to market risks. Read all the related documents carefully before investing.

Disclaimer: Registration granted by SEBI, membership of BASL (in case of IAs) and certification from NISM in no way guarantee performance of the intermediary or provides any assurance of returns to investors.

Compliance Officer:

Name: Shrikant Jagtap

Email: shrikant.jagtap@moneyworks4me.com

Mobile No: +91 97638 00745

Grievance Officer:

Name: Mukta Vaze

Email: mukta.vaze@moneyworks4me.com

Mobile No:+91 98609 19463

Principal Officer:

Name: Atharva Bhide

Email: atharva.bhide@moneyworks4me.com

Mobile No:+91 91758 99463

SEBI regional/local office address-

Plot No. C 4-A , G Block, Near Bank of India, Bandra Kurla Complex, Bandra East, Mumbai, Maharashtra 400051

Address:

The Alchemists Ark Pvt. Ltd., B-101, Signet Corner Building, Balewadi Phata, Baner, Pune, Maharashtra 411045

Data provided by Accord Fintech Pvt. Ltd.

© 2025 The Alchemists Ark Pvt. Ltd. All rights reserved. MoneyWorks4Me ® is a registered trademark of The Alchemists Ark Pvt. Ltd.

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