Equity: Rubric on Choosing Companies to Invest

RoE on investment is defined three factors, where you invest it, when, and how much. In this blog post, I'm sharing my draft on rubric to define the first factor, where to invest. Personally I split the characteristics of good companies into two:

Quantity

1. Dominant companies with large barrier to entry (assets, market share, patents, sector)

2. High return on capital (ROA)

3. Strong balance sheet (Revenue, Net Income, Free Cashflow, EPS, ROE, NP%)

4. Well-manage Debts (DER, % debt growth)

Quality

1. Excellent management good governance

2. Limited exposure on extrinsic risk we cant control (Resilience -- good management, diversified business model)