Questions to ask about a Company's Valuation (Continued)

[Source: F. Mitchell's Accounting Course, UEBS 2011]

(1) Check for "Healthy" growth.
 (a) Are profit margin's shrinking?
 (b) Is asset investment growing?
 (c) How is credit control?
 (d) What is the cash position? (symptoms of overtrading?)
 (e) Is Growth converted into Cash?

(2) Check Liquidity
 (a) Check the Current and Quick Ratios

(3) Check Gearing
 (a) What is the firm's interest cost?
 (b) Check Interest Cover (TIE -> Times Interest Earned)