Fifteen rules to identify a good company to invest

One of the major difficulties faced by an investor is the ability to identify a good company and the correct price to buy. The basic rules to identify a good company to invest were formulated by one of the best investors of all time an American named Philip Fisher. He wrote of his formula in a 1950’ s classic called “Common Stocks and Uncommon Profits”.

1. Does the company have products and services to steadily increase sales over a period of several years?

 2. Will the management continue to invest in new-product development so as to take the place of existing products when sales begin to taper? 

3. How are the sales of a company organized? 

4. How effective is the company's research and development in relation to its size?

 5. What is the margin of profit of the company? 

6. Will the company’s profit margin improve? 

7. How does the company treat its labour and personnel? 

8. How does the company treat its executives? 

9. What is the depth of management in the company? 

10. How are the financial controls of the company? 

11. Are there any aspects peculiar to this industry that offers a clue to the investor about any outstanding features of the company? 

12. Is the company outlook for profits short-term or long term? 

13. Will the company be forced to issue new equity to finance future growth? 

14. Is the management open about its problems to the investors? 

15. Does the owner have outstanding integrity

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