This customized Screener Excel Template is designed to give investors a quick yet detailed glance at a company’s financials. It is constructed to enable investors/analysts to decide whether it makes sense to spend time digging into the company’s annual reports and other documents.
What’s inside?
1. Customized Income Statement: A customized income statement that enables the investors to evaluate the company’s revenues, costs, operating income, and net profit.
Here’s a snapshot of HUL’s income statement:
Why is this meaningful?
The customized excel includes adjustments to reported financial numbers – for instance, the revenues and profit figures does not include the impact of “other income”, which is income from non-operating sources such as dividends or fixed deposits. This is because investors ought to be mainly concerned with income from operating sources. Other income may distort the true picture of a company’s performance.
2. Annual Financial Analysis: This is a one-stop sheet that includes all the important financial ratios that I use to filter out a company’s financials at initial stages. This sheet helps me decide whether it may be worth spending time on digging through the company’s annual reports, concalls, or investor presentation.
What if you do not know what each of these ratios mean?
Worry not! Simply hover over the name of the ratios and read the comments, where I've discussed each ratio at length, including the formula used to derive that number.
Like this, for instance:
The sheet includes the following tables:
(a) Income statement line items as a % of revenue from operations: This sheet tells us, for instance, the costs as a % of revenues. So if a company is generating revenues of Rs 1500 crores and spending Rs 600 crore in raw materials, then this table tells us that the raw material costs comprise about 40% of revenues.
Here's a snapshot from Deepak Nitrite's income statement line items as a % of its revenues:
(b) Profitability and Growth Ratios: This table shows us the annual growth % in revenues and profits and also exhibits margins. It tells us, for instance, how much profit the company has been able to generate as a % of its revenues during a particular year.
Again, a snapshot of Deepak Nitrite's profitability and growth ratios over the years:
(c) Working Capital Efficiency Ratios: These are ratios that tell us how efficiently the company uses its working capital – including inventory and receivables. As mentioned earlier, you will learn exactly what each of these ratios mean when you hover over the their name.
(d) Asset Efficiency Ratios: These are ratios that tell an analyst how efficiently the company has been using its fixed assets.
(e) Leverage Ratios: This table shows the capital structure of the company. Is the company highly levered? In other words, how much debt the company has taken to fund its operations. As a general rule, I am cautious of high debt companies – companies that have a debt to equity ratio of greater than 0.3. But of course, each company must be evaluated on the merits of the industry it operates in. Different industries have different average level of debt.
(f) Capital Allocation Ratios: This table tells how whether the company is a good capital allocator. Higher return on capital employed (greater than 20%) is preferred since that tells us that the company has been successful in deploying incremental funds to the right use – one that generates decent profit for shareholders.
(g) Earnings Quality: CFO to EBITDA ratio tells us whether the company has been able to turn its operating profits into hard cash. If not, then it’d mean that the company’s earnings quality is poor – a clear red flag.
(h) Capital Expenditure: How much is the company spending on expanding capacity? This, combined with higher fixed asset turnover and higher ROCE, is a signal that the company may see good growth going forward. But of course, as a prudent investor, one must combine this with an in-depth study of the annual report, concalls, and investor presentations to decode the business profile and future growth opportunities.
(i) Valuations: This table provides a glance at the company’s market capitalization, enterprise value, price-to-earnings, price to CFO, price to sales, and EV to EBITDA ratios over the years. Hover over the name of each of these in the sheet to learn what they mean, including the formula used to arrive at these numbers.
A snapshot of Deepak Nitrite's valuations over the years:
3. This sheet also includes a quarterly income statement and quarterly financial analysis to enable the investor to gauge the changes in financials over the previous quarters.
4. Last but not the least, there's a dashboard that gives you a quick glance at the charts of these essential financial ratios. A snapshot of two of these charts (of Deepak Nitrite's revenue growth % and ROCE % over the years) below:
