SummaryBusiness AssessmentFinancial Shape AssessmentA-List RatingsValuation Appraisal
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Why Equity?Why A-List?

Research Process

Stage 2: Financial Shape Assessment

This looks at the company’s financial track record in terms of sales, profit margins, cash generation, capital allocation, balance sheet structure and rates of return on invested capital. Key figures and interpretive ratios are provided for at least the preceding five years. Consideration is also given to management quality and ownership structure. The criteria we look for include:

  • Sales growth (price and volume)
  • Stable or expanding operating margins
  • EPS growth
  • Superior returns on equity
  • Optimal financial gearing
  • High conversion of earnings to free cash
  • Stable and experienced management team
  • Focus on core business
  • Low reliance on acquisition-led growth
  • Equity ownership by directors
  • Record of returning cash to shareholders

Our research reports set out a discussion of the findings of the Business Assessment and Financial Shape Assessment. Companies then proceed to stage 3, where A-List ratings are applied.