Four questions we ask every company

Before you read a single number, before you look at any chart, every company can be reduced to four questions. We ask them in the same order, every time.

1. What does it sell, and to whom?

Sounds basic. Most retail mistakes start by skipping this. If you can't explain what the company sells in two sentences, the rest of your analysis is built on sand.

A cement company sells cement to construction. A bank sells loans funded by deposits. A pharma company sells medicines in India and abroad. A software company sells engineering hours to global enterprises. These are not the same business, and the same financial metrics mean different things in each.

2. Is it growing, and is the growth healthy?

A company doubling revenue every year sounds great - until you find out it's funded by ever-larger borrowings and the customers haven't paid. Healthy growth needs four things:

Revenue going up
Margin holding or expanding
Cash from operations keeping pace
Debt staying manageable

Four questions we ask every company

Before you read a single number, before you look at any chart, every company can be reduced to four questions. We ask them in the same order, every time.

1. What does it sell, and to whom?

Sounds basic. Most retail mistakes start by skipping this. If you can't explain what the company sells in two sentences, the rest of your analysis is built on sand.

2. Is it growing, and is the growth healthy?

A company doubling revenue every year sounds great - until you find out it's funded by ever-larger borrowings and the customers haven't paid. Healthy growth needs four things:

Revenue going up
Margin holding or expanding
Cash from operations keeping pace
Debt staying manageable