Checklist score

Interpretation

Roughly thirty explicit pass/fail checks across growth, profitability, balance sheet, capital allocation, and valuation, scored as the share passed.

Formula

Score = checks passed ÷ (checks passed + checks failed); checks whose inputs are structurally missing are marked n/a and excluded from both sides

Why it matters

A checklist substitutes discipline for mood. Each check states its threshold openly — revenue CAGR at least 5%, debt under 3× FCF, SBC under 15% of FCF, and so on — so a company cannot pass on vibes, and you can disagree with a specific threshold rather than with an opaque score. Unlike the quality score, which weights and blends evidence into one number, the checklist keeps every judgment visible and equal-weighted: the value lies less in the headline percentage than in reading which specific checks fail.

What good looks like

Passing above roughly 75% of applicable checks is rare and marks a business strong on most dimensions at a defensible price. 50–75% is typical of decent companies with identifiable weaknesses — read the failed checks to see whether they are structural or cyclical. Below 50%, several pillars are failing at once. The n/a mechanism matters: a bank skipping capex-based checks is scored only on what applies to it.

Caveats

Every threshold is a judgment call applied uniformly across industries; sensible numbers for software are demanding for railroads. All checks weigh equally, though in reality one broken balance sheet outweighs three passed growth checks. The checks read the latest filings — they see last year's business, not next year's. Use the list as an inspection sheet, not a verdict.