I have been a silent reader/browser of this great investing forum so and this has definitively helped/helping me in sharpening up my investing skills. This is going to be my first post, so pls bear with me if this is too basic question or I am not posting at the right place.
I started my investment journey since 2013 but my investment thesis were not so sound and were more around momentum plays. This has costed me to some extent and forced me to think about building up an sound investment model.
As suggested by @Donald in one of the post on VP, I started reading “The Five Rules for Successful Stock Investing” and tried to capture the different component of investment process in a spreadsheet.
Brief about what spreadsheet does. There are 2 Tabs in it -
(a) Economic Moat - This tab calculates important parameters (Percentage of Free Cashflow to Sales, Net Margin as a percentage of Sales, Return on Assests and Return of Equity) for business evaluation as presented by Pat Dorsey in his book “The Five Rules for Successful Stock Investing”
(b) Consolidated - This has consolidated data of individual company from screener.in (assuming this data is correct)
For some reason, “Net Margin as a percentage of Sales” for even stronger companies are below the benchmarks as per “The Five Rules for Successful Stock Investing” book. For example, as per my calculations, for Stronger companies like Marico, “Net Margin as Percentage of Sales” are in the range of 7% to 13% while Pat Dorsey in his book talks about it should be more than 15%
I am confused if my calculations for Net Margin As percentage of Sales (Percentage of Net Profit/Sales) are incorrect or I am clearly missing something obvious.
I would appreciate if someone pls guide me on this.
Marico.xlsx (26.6 KB)