Stock Selection Model

Stock Selection Model is a useful tool for analyzing company’s overall financial health. The purpose of the application is to generate Sell, Buy, or Hold Recommendations for certain stock(s). The model graphically resembles “Financial Ratios Model” and calculates following financial ratios:

1. Liquidity Ratios:

• Current Ratio;

• Quick Ratio.

2. Profitability Ratios:

• Return on Equity (ROE);

• Return on Assets (ROA);

• Gross Profit Margin (GPM);

• Net Profit Margin (NPM).

3. Efficiency Ratios:

• Total Asset Turnover (TAT);

• Fixed Asset Turnover (FAT);

• Average Collection Period (Average # of Days during which Receivables remain outstanding);

• Inventory Days (average # of Days during which inventory stays on “shelf”);

• Accounts Payable Days (average # of Days during which payables balance remains outstanding);

• Cash Conversion Cycle (Average # Days needed to purchase/produce inventory, sell it and collect receivables).

4. Leverage:

• Debt Ratio.

5. Bankruptcy (Z Score) Indicator

6. Other:

• Earnings Per Share (EPS);

• Price-to-Earnings (P/E) Ratios.

7. DuPont/ROE decomposition table.

Model can automatically label ratio values as: Poor, Normal, Good, or Excellent.

UNLIKE THE “FINANCIAL RATIOS MODEL” THE STOCK SELECTION MODEL EMPLOYES PROPRIETARY ALGORITHM DEVELOPED BY THE BUSINESS MODELS, INC TO GENERATE SELL, BUY OR HOLD RECOMMENDATION. WE RECOMMEND ENTERING DATA FOR AT LEAST 3 YEARS (THE MORE THE BETTER) IN THE “DATA ENTRY” TAB. AFTER ENTERING DATA SELECT THE “ANALYSIS AND SUMMARY TAB” AND CLICK ON THE “GENERATE AUTOMATIC RECOMMENDATION” BUTTON.

PLEASE NOTE: THE MODEL HAS NOT BEEN TESTED AND HAS ITS MERITS ONLY IN OUR ACADEMIC/THEORETICAL JUDGMENT.

STOCK SELECTION MODEL COULD BE AN INDEED VALUABLE TOOL FOR PROFESSIONAL OR AMATEUR INVESTORS, BUT USING THE MODEL DOES NOT AND CANNOT GUARANTEE FAVORABLE INVESTMENT OUTCOMES.

***NOTE: xlsm format requires MS Office 2007!

***NOTE: THIS IS A VBA PROJECT. PLEASE ENABLE MACROS BEFORE USING!!!