It is nearly impossible to document all ideas, issues, terms
and techniques that an investment analysis professional encompasses during his
or her work. Analysts often use one or more of the strategies while analysing a
potential investment opportunity. Personally I believe that no literature can
be complete and authoritative on this subject, though many authors, including
myself, have attempted to cover as much as possible.
This article only aims at stimulating and imaginative and
holistic approach to dealing with investment matters and what questions one
should be asking while analysing a company.
What is the size of the firm (large, small)?
What stage is the company and industry in (new, mature,
declining)?
Who are the customers of the company (individuals, industry,
institutions)?
Is the company project oriented (drugs, mining, oil &
gas producers, construction)?
How is the company socially responsible (is it a source of
pollution, land contamination) which usually does not show on Financial
Statements?
Is the company labour / capital / technology intensive?
What is the product category of the company (sophisticated /
low value)?
What is the competitive landscape of the company (local
competition, foreign competition)?
What is the regulatory environment in which the company
operates (legal, taxation, political)?
What is the exposure of the company to foreign revenues,
currency fluctuations, changes in policy, trade policies?
What are the major dependencies of the company (prices /
availability of commodities, few major customers, products or governments)?
Are there any special challenges that the company faces
which other competitors do not?
Are there often special items that make the (GAAP) financial
statements different from normalised net income?
Any other item that you think you’d like to know before
investing in the company?
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