30 Comments
Mar 11, 2023Liked by Compounding Quality

Thanks for share your knowledge

I apreciate

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author

Thank you for reading it! Without readers it wouldn't make much sense to write these articles. :)

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Mar 10, 2023Liked by Compounding Quality

By the way, very useful text!!

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Mar 10, 2023Liked by Compounding Quality

Doesnโ€™t the interest coverage ratio comes from the income statement??

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author

Good remark. It combines the healthiness of the balance sheet and the income statement.

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As usual, great info and to the point!

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author

Thank you very much, Vinny!

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Of course!!!

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Great overview Compounding Quality!

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author

Thank you very much. I love your content as well!

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Mar 11, 2023Liked by Compounding Quality

After reading your article, I showed it to my sister, who has been in accounting for a long time, and she was pleasantly surprised at how easily you were able to describe complex terms "In child language". My sister and I look forward to your next articles!

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author

Wow. Thank you very much, Ted! This is one of the kindest compliments I've received as this is exactly the goal of these articles.

The best is yet to come!

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Mar 13, 2023Liked by Compounding Quality

Thank you for another great post!

The question I would like to ask you is: together with the interest coverage ratio, would you also look at the current, and more importantly, the quick ratios? Do you consider them equally important for your analysis?

In my opinion, covering the interest on the debt is important but the business must be able to meet its short term obligations like accounts payable for example. I like to see quick ratios of at least 1, and current ratios above 1.5.

Thank you!

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author

Hi,

When you buy quality companies with high margins, a high ROIC, a wide moat, ... they usually don't have liquidity issues. Often, they even have a net cash position.

Sometimes I take a look at the quick and current ratio to take a quick glance at a company. When these ratios are very high, it's a good sign. When they are below 1, you should take a look at the underlying reason why these ratios are so low.

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Mar 13, 2023Liked by Compounding Quality

Thank you very much for the explanation!

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Thanks sir

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author

Thank you, Pankaj! Don't hesitate to reach out if you have questions.

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Brief, insightful, love this!

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author

Thank you very much, Shailja!

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Mar 15, 2023Liked by Compounding Quality

Excellent! I really enjoy reading your articles.

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author

Thank you, Joseph!

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Mar 15, 2023Liked by Compounding Quality

Great article - Iโ€™ll certainly be using those ratios when next looking at companyโ€™s! Joe.

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author

That's lovely. Tomorrow we'll publish an article about how to read an income statement!

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May 13, 2023Liked by Compounding Quality

Very well explained. Thanks!

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author

It's an honor, Maisam!

Are there any topics you want to see covered in the future?

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May 14, 2023Liked by Compounding Quality

Letโ€™s say I wanna compare JKHY, FIS and FISV which are all providing software services to the financial and banking sector. How should I evaluate them?

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author

That's a great question, Maisam! I'll write an article about this in the future.

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Mar 31, 2023Liked by Compounding Quality

Very nice. Loved it ๐Ÿ‘Œ๐Ÿ‘Œ

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author

It's an honor, Anil!

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Yeah, for example what metrics to use for comparing peers in different industries.

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