Cheat Sheet

Key Concepts:

Attractive investment targets are usually characterized by:

    • High ROIC;

      • High profit margin (NOPAT/Sales), and/or

      • Low capital investment requirement, i.e. high IC turnover ratio (=Sales/IC)

    • Low required return by investors (i.e. low WACC);

    • High growth

      • But only if ROIC>WACC

    • A wide and deep "Economic Moat".

SEC Beginners' Guide to Financial Statements

Porter's 5-Forces Analysis