Whats your Top Metrics?

Replies to This Discussion

Permalink Reply by sunita on April 28, 2009 at 12:48am

It depends on type of sector where you invest, although there is not much difference but it has difference on return and other factors which are responsible for the growth of that investment
1. DCF
2. IRR
3. NPV
4. Pay back period
5. Risk and return associated with that investment

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Permalink Reply by Sam Thomas on April 28, 2009 at 12:52am

We cannot have foolproof analysis of any investment oppurtunity.

The most important thing I would consider is the Integrity of the managment. The common financials indicators play a secondary role. There are instances where despite the financial indicators being not at par with investment norms, the investment has given good returns.

More than the financials it is the ability of the investor to take a informed decision considering his expertise and the micro and macro indicators with respect to the investment.

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Permalink Reply by Ashwin on April 28, 2009 at 12:53am

The criteria will depend upon specific sectors
1) DCF and Relative valuation with multiples like EV/EBITDA, Price / Book
2) NPV
3) IRR
4) Payback period
5) Quality of earnings

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Permalink Reply by fahad on April 28, 2009 at 1:01am

For Cost benefit analysis
1. modified IRR
2. modified Payback
For exit strategy
1. skill of Management
2. envoirmental macro & industry analysis

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Permalink Reply by Naseem Ahmed Khan on April 28, 2009 at 3:14am

1) NPV
2) MIRR
3) ROE
4) Sensitivity analysis
5) Over all Industry analysis

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Permalink Reply by Fred Arende on April 28, 2009 at 5:10am

For a real meaningful assessment of investment in my opinion, the investment valuer should take into account all the aspect of investment environment that the investment will prevail in. in this light i think the following metrics should be very useful
1. Discounted cash flow method (NPV, IRR, etc)
2.Net Assets valuation method.
3. Capitalized Earnings Approach
4.Market Multiples Approach and
5.Enterprise Value
This in my opinion will take care of the risks involved, market competitors, time value of money and required returns.

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Permalink Reply by sriram venkatakrishnan on April 28, 2009 at 6:45am

1)Management (if I am just buying and would not manage it)
2)Established Earnings potential (IRR,NPV as they also include risk as discount rate)
3)Market Value of assets purchased( as a lower benchmark - worstcase)

so, ideally if the value from present value of (earnings + Market value of Assets) > present value of (invesment) at all the time in the future then it is a good invesment

But one would have to benchmark it with alternatives to make a choice..

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Permalink Reply by Giang NN on April 28, 2009 at 7:21am

1. Firstly, Profitable ratios
2, Plan appraisal ratios: NPV, IRR..
3, Risk and return
4, Capital indexs
5, Business activity ratios

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Permalink Reply by Mamoun Abdallah Ahmad Tabakhna on April 28, 2009 at 8:58am

1- Free cash flow
2- NPV
3- IRR
4- Profitability index(PI)
5- Discounted payback period

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Permalink Reply by Anim on April 28, 2009 at 9:04am

Changes sectorwise, to be generalised :

Management
NPV
IRR
Risks associated
Source of earnings

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Permalink Reply by profkeru on April 28, 2009 at 9:17am

1) Risks involved
2)IRR
3)Future growth
4)Current debts
5)also depends on how well I know the industry/product

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Permalink Reply by Rick Smith on April 28, 2009 at 10:22pm

1. NPV
2. Liquidity
3. Return (payback)
4. Historical data
5. Management culture

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