The mental model for analysing a company’s quality and valuation

This is the mental model I use when analysing a company’s quality and valuation.Company A and Company B both make $1bn in earnings. Comparing a company’s earnings to its invested capital, revenue, historic earnings and market capitalisation reveals four important investing ratios.

Despite earning the same, Company A is a more efficient capital allocator (ROC), has more negotiating and pricing power (margins), has faster growth (growth rate) and is more attractively valued (earnings yield) than Company B.

https://twitter.com/long_equity/status/1635702828575358980

# Tips For Beginners

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  • Tiramisu2020
    ·2023-03-15
    Thanks for sharing
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  • Trainman
    ·2023-03-15
    thanks for sharing
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  • huaer8497
    ·2023-03-15
    🌹
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  • SanWangtikup
    ·2023-03-15
    Thanks
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  • Tiger Sniper
    ·2023-03-15
    k
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  • UJANG4774
    ·2023-03-15
    nice
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  • TigerFly
    ·2023-03-15
    Ok
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  • TigerTigerTi
    ·2023-03-15
    ok
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  • johhnynomates
    ·2023-03-15
    [Like]
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  • TTH4Legs
    ·2023-03-15
    .
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  • superpopo
    ·2023-03-15
    ya
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    • BC1970
      Hhh
      2023-03-15
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  • Hkh
    ·2023-03-15
    ok
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  • TofuQQ
    ·2023-03-15
    Ok
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  • BenYSLim
    ·2023-03-15
    Ok
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  • DJosh
    ·2023-03-15
    grt
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  • HelenJanet
    ·2023-03-15
    👍
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  • StickyRice
    ·2023-03-15
    Nice
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  • Sandyboy
    ·2023-03-15
    Ok
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  • Reds2007
    ·2023-03-15
    Ok
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  • MultiBaggers
    ·2023-03-15
    👍
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