📋 Investment Cheatsheet — Quick Reference
Book: Indian Equity Investing (CFA-Style) · Use with: Chapters 01–98 Format: Mobile / PDF friendly · Hindi + English
1. Wealth & Compounding
Savings = Income − Expenses
Investor Mindset: Expenses = Income − Investment
Real Return = Nominal Return − Inflation
Required Corpus (4% Rule) = Annual Expenses ÷ 0.04
Rule of 72: Years to Double = 72 ÷ Return (%)
SIP FV = PMT × ((1 + r)^n − 1) ÷ r
Wealth = Amount × Time × Discipline| CAGR | Double Time (approx) |
|---|---|
| 8% | 9 years |
| 12% | 6 years |
| 15% | 5 years |
2. Market & Valuation Basics
Market Cap = Share Price × Total Shares
Enterprise Value (EV) = Market Cap + Debt − Cash
EPS = Net Profit ÷ Shares Outstanding
P/E = Share Price ÷ EPS
P/B = Share Price ÷ Book Value per Share
Book Value per Share = Shareholders' Equity ÷ Shares
Dividend Yield = (Dividend per Share ÷ Price) × 100
PEG = P/E ÷ EPS Growth Rate (%)
Graham Number = √(22.5 × EPS × BVPS)3. Profitability & Efficiency
ROE = (Net Profit ÷ Shareholders' Equity) × 100
ROCE = (EBIT ÷ Capital Employed) × 100
DuPont ROE = Profit Margin × Asset Turnover × Financial Leverage
Asset Turnover = Revenue ÷ Total Assets
Interest Coverage = EBIT ÷ Interest Expense
Debt-to-Equity = Total Debt ÷ Shareholders' Equity
Net Debt = Total Debt − Cash| Ratio | Strong (general) | Caution |
|---|---|---|
| ROE | > 15% consistent | < 10% or volatile |
| ROCE | > 15–20% | < 12% |
| D/E | < 0.5 (non-financial) | > 1.5 |
| Interest Coverage | > 3× | < 1.5× |
4. Cash Flow & Dividends
FCF = Operating Cash Flow − CapEx
FCF Yield = FCF ÷ Market Cap
Payout Ratio = Dividends ÷ Net Profit
Sustainable Dividend → FCF covers dividendAnalyst rule: Dividend cash se aata hai, profit se nahi — FCF pehle dekho.
5. Advanced Screens
Altman Z (manufacturing guide):
Z > 2.99 → Safe zone
1.81–2.99 → Grey zone
Z < 1.81 → Distress zone
Piotroski F-Score: 0–9 (≥ 7 = strong quality signal)
Margin of Safety = (Intrinsic Value − Price) ÷ Intrinsic Value
Intrinsic Value (DCF) = Σ (FCF_t ÷ (1 + WACC)^t) + Terminal Value6. Banking Sector (Quick)
NIM = Net Interest Income ÷ Avg Earning Assets
GNPA = Gross NPAs ÷ Gross Advances
NNPA = Net NPAs ÷ Net Advances
CASA = CASA Deposits ÷ Total Deposits
ROA = Net Profit ÷ Avg Assets
PCR = Provisions ÷ Gross NPAs7. Portfolio & Risk
| Profile | Equity | Debt | Gold | Cash |
|---|---|---|---|---|
| Conservative | 40% | 50% | 10% | — |
| Moderate | 60% | 25% | 10% | 5% |
| Aggressive | 80% | 10% | 5% | 5% |
Drawdown = (Peak − Current) ÷ Peak
50% loss → needs 100% gain to recover
Rebalance when allocation drifts > 5–10%
Position limit (retail): single stock ≤ 5–10%8. Tax (India — Illustrative)
| Asset | Holding | Tax (general) |
|---|---|---|
| Equity delivery | < 12 months | STCG ~20% |
| Equity delivery | ≥ 12 months | LTCG 12.5% above ₹1.25L |
| Debt MF | per slab | per current rules |
Verify current IT Act / budget rules before investing.
9. Red Flags — One-Line Scan
- 📉 Falling revenue + rising debt
- 📉 High ROE only from leverage (check DuPont)
- 📉 FCF negative but high dividend
- 📉 Promoter pledge rising
- 📉 Auditor change / qualified opinion
- 📉 P/E high but growth slowing (PEG > 2)
- 📉 Value trap: low P/E + declining business
10. Great Investor Quotes (Action)
| Principle | Application |
|---|---|
| Margin of Safety | Buy below intrinsic value |
| Circle of Competence | Stay in understood businesses |
| Mr. Market | Use volatility, don't follow it |
| Quality at Fair Price | Great business > cheap junk |
Educational only. Not investment advice. Cross-check all numbers from latest annual reports.
→ Full checklist: CHECKLIST.md