Investing Criteria
| Rational assessment of businesses. |
| company is a cash-generating, industry-dominating, wealth-creating powerhouse — what we call a Rule Maker. |
| Directions: |
| We’ve identified 11 general attributes of Rule-Making companies. Part 1 covers five qualitative aspects of a business. For each of these, the scoring is simple — 1 point if the attribute is met, 0 points if it’s not. Part 2 covers six financial criteria. Since these are more objective, each is worth 2 points if met, 0 points if not. Altogether, that’s 17 possible points. Got it? If so, pick a company to analyze and let’s get started! |
| *Note* Rule Maker analysis is primarily for companies with at least $1 Billion in annual sales. |
| Part 1: Evaluating the Biz — Answer honestly! It’s either 100% yes, or else no. |
| 1) Dominant Brand — Is the company the standout category king within its industry? |
| 2) Repeat Purchases — Do customers return for purchase at least once a month? |
| 3) Convenience — Within its industry, is the company’s product/service accessibility and convenience the best? |
| 4) Expanding Possibilities — Can you answer “yes” to the following two questions? |
| a) Do your friends know about and use the product/service? |
| b) Is worldwide expansion believable for their stuff? |
| 5) Your Familiarity & Interest — Are you a user of the company’s products or at least very familiar with them? |
| Part 2: Company Financials — Fill in the cells outlined in blue. The spreadsheet will crunch the numbers. |
| *Important Note* — When evaluating quarterly (10-Q) results, use the year-to-date income statement data. |
| For example, if a company is 3/4 of the way through its fiscal year, use the full 9 months of info. |
| 10Q Report |
| quote.fool.com |
