Quality score (0–100)

Interpretation

A composite 0–100 score summarizing profitability, growth, consistency, balance-sheet strength, and capital discipline.

Formula

Profitability 30 pts (net margin up to 15: >15% = 15, >8% = 10, >2% = 5; ROE up to 15: >20% = 15, >12% = 10, >6% = 5) + Growth 25 pts (revenue CAGR up to 10: >10% = 10, >4% = 7, >0 = 3; FCF CAGR up to 15: >10% = 15, >4% = 10, >0 = 5) + Consistency 20 pts (share of last 10 years profitable × 10 + share FCF-positive × 10) + Balance sheet 15 pts (debt/FCF: none or <2 = 10, <4 = 6, <6 = 3; cash > debt = 5) + Capital discipline 10 pts (shrinking share count = 5; SBC/FCF < 15% = 5)

Why it matters

No single metric identifies a good business, and any single metric can be gamed. The score forces the evidence to agree: high margins and returns on equity (is the business profitable?), growing revenue and FCF (is it going anywhere?), a decade of consistent profits and cash generation (is it durable?), manageable debt with a cash cushion (can it survive trouble?), and a shrinking share count with modest stock compensation (does management treat owners well?). Businesses that score well on all five at once are structurally rare.

What good looks like

70 and above is labeled High — strength across most dimensions simultaneously. 45–69 is Medium, typically strong in some areas and weak in others; the breakdown tells you which. Below 45 is Low, meaning multiple pillars are weak at once. The score requires at least 4 years of filing history to compute. Note that valuation is deliberately excluded: a great business at 60 times cash flow keeps its high score — quality and price are separate questions.

Caveats

Thresholds are calibrated for ordinary operating companies; banks, insurers, REITs, and young loss-making growth companies will score poorly or oddly because the inputs mean different things for them. The score is backward-looking by construction — a moat that just broke still scores on its history. Treat it as a filter and a summary of the record, never as a verdict on the future.