Fill in a sheet from a company’s annual report

1. Find the annual report

The annual report is on the company’s website, in the investors or financial information section. In France, large listed companies publish a universal registration document, which contains the accounts, the management report and the risk factors. The AMF’s info-financiere.fr website gathers the regulated information of French companies. For a US company, the annual report is called a 10-K and can be found on EDGAR, the SEC’s website.

Take the latest report published, and keep the two or three previous ones at hand for the criteria calculated over several years.

2. The four parts to read

• The income statement: revenue, cost of sales, operating profit, net income, earnings per share. This is where margins and the P/E are read.
• The balance sheet: cash, financial debt, equity, current assets and liabilities. This is where net debt and liquidity are read.
• The cash flow statement: operating cash flow, capital spending, dividends paid, share buybacks. This is where FCF is calculated.
• The notes: the details of borrowings, tax and share count. They answer the questions the tables leave open.

Each criterion of a preset strategy has help text that says where to read its figure, and a link to its glossary entry, which details the formula and the traps.

3. Create the sheet and fill in the header

Create a new sheet and choose its strategy: a preset strategy, used as it is, one of your own strategies or an empty strategy. The strategy is fixed at creation. To change the criteria later, you edit your strategy itself. A preset strategy cannot be edited: to adapt it, duplicate it before creating the sheet, and create the sheet with your copy.

The header takes the company name, its ticker, its sector, your tracking status, the country, the date, your fair value and the currency. The fair value is used by the “Margin of safety” criterion, which compares it with the share price you enter in that criterion.

4. Enter the figures

Numbers are typed with a decimal point: 12.5. A % sign after the number is accepted. An unreadable entry is flagged below the field and is not taken into account.

Take a fictitious company, called Company B here, and the “Operating margin” criterion. In the income statement, you read revenue of €640 million and recurring operating profit of €96 million. You enter 15, for 15%. The criterion’s verdict appears straight away.

For a calculated criterion, you enter the two figures, and the app does the calculation. For the P/E × price / book value of the Value preset strategy, for example, you enter the P/E and the price / book value.

5. When a figure is missing

Rebuilding some histories by hand takes several reports. Data sites such as Stock Unlock, Moning or Macrotrends show averages over several years. They do not all use the same definitions: to compare two companies, take their figures from the same source.

If a criterion makes no sense for the company, such as gross margin for a bank, tick “Not applicable”. The tutorial not applicable criteria explains when to do so.

6. Write your thesis and your decision

At the bottom of the sheet, write your thesis in a few lines, then the risks that could invalidate it. Finally, choose your decision: “I’m buying”, “I’m watching” or “I’m passing”. The criteria verdict describes the sheet, the decision remains yours, and it does not count in the score.

The “Save” button keeps your entries. After the next earnings release, you can update the sheet and freeze a version.