No. of Recommendations: 14
Hello KPers:

Here is a list of comprehensive RM resources, included is also links to my summaries of the RM Seminar lessons.

Study these and you'll be a whiz at Rule Maker evaluation.



RM Seminar Lesson Summaries

Lesson 1 Summary

Lesson 2 Summary

Lesson 3 Summary

Lesson 4 Summary

Lesson 5 Summary

Lesson 6 Summary

Lesson 7 Summary

Lesson 8 Summary

Lesson 9 Summary

Lesson 10 Summary

Lesson 11 Summary

Lesson 12 Summary

Lesson 13 Summary

RM Resources

Useful Articles

Rule Maker Spreadsheets

Rule Maker Discussion Boards
Rule Tweener Companies

Rule Maker Portfolio Archives

Understanding financials
I - Drippin' Groovy "Back to Basics" (Intro to SEC Forms)

II - Back to Basics

III - The Balance Sheet

IV - Noncurrent Assets

V - Current Liabilities Explained

VI - Understanding Noncurrent Liabilities

VII - Finishing the Balance Sheet

VIII - Fun With Numbers

IX - Balance Sheet Finale

X - Introducing the Income Statement

XI - Income Statement Demystified

XII - The Cost of Doing Business (COGS)

XIII - Income Statement Odds & Ends

XIV - Today's Buzzword : EPS

Statement of Cash Flows

The Value of Cash Flow

Cash Flow Efficiency

Calculating Cash Flow Ratios

TMFSelena posted a series of very helpful articles on how to decipher the various parts of a financial statement over in the RM Seminar FAQ board. You may want to check them out if you are having problems understanding financial concepts.

The Balance Sheet

The Income Statement

The Statement of Cash Flows

Different Names for the Same Thing

Simpler Balance Sheet

Simpler Income Statement

Simpler Cash Flow Statement

Rule Maker formulas


Use Income Statement
Sales Growth = (Current Sales/Year-ago Sales) - 1
Sales growth of at least 10%
It is okay if both income statements are for a single quarter (as long as it is the same quarter, different years) or both are for a full year

Use Income Statement
Gross Margins = (Sales - Cost of Goods Sold)/Sales
Gross margins of at least 50%

Use Income Statement
Net Profit Margins = Net Income/Sales
Net profit margins of 7% or greater

Use Balance Sheet
Cash-to-Debt Ratio = Cash/(Long Term Debt + Short Term Debt)
Cash no less than 1.5x total debt

Use Balance Sheet
Foolish Flow Ratio = (Current Assets - Cash)/(Current Liabilities - Short Term Debt)
Foolish Flow Ratio below 1.25

Use Cash Flow Statement
Cash King Margin = (Operating Cash Flow – Capital Expenditures)/Sales
Cash King Margin = Free Cash Flow/Sales
Cash King Margin of at least 10%


Capital Expenditures includes:
Acquisition of Property and Equipment
Capital Expenditures
Capitalized Software Costs

Cash includes:
Cash equivalents
Marketable securities
Short-term marketable securities
Investment securities
Other securities
Short-term investments
Trading assets

Cost of Goods Sold includes:
Cost of Product
Cost of Services

Current Assets include Cash and:
Accounts receivable
Trade accounts receivable
Accounts receivable -- related parties
Other receivables
Loan receivable
Inventories (includes raw materials, work-in-process, semi-finished goods, and finished goods)
Deferred tax
Prepaid income tax
Prepaid assets
Other prepaid expenses and receivables
Other current assets

Current Liabilities include:
Accounts payable
Income taxes
Current portion of long-term debt
Accrued liabilities (expenses)
Deferred/unearned revenue
"Other current liabilities"

Long-Term Debt includes:
Notes/Loans payable
Bank line of credit
Capital lease obligation
Preferred stock
Convertible notes

Operating Cash Flow includes:
Net cash provided by (used in) Operating Activities

Short-Term Debt includes:
Short-term debt
Short-term borrowings
Current portion of long-term debt
Debt maturing within one year


"Current Assets on the Balance Sheet" By Phil Weiss (TMF Grape)

"What Is Free Cash Flow?" By Bill Mann (TMF Otter)

"The Many Faces of Debt" By Phil Weiss (TMF Grape)

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