Part 4 of 5 The Value Investor Journey

The Scotti way — from insight to decision

The masters' principles, turned into numbers you can screen for. Each metric gets a short card explaining what it measures and which principle it puts to work — then two scenarios to practise reading it.

Intrinsic Value
What a business is actually worth, based on the cash it can generate — independent of its current share price.
Margin of Safety (MoS)
The discount between a stock's price and its intrinsic value. A buffer that protects you when your analysis is partly wrong.
NCAV
Net Current Asset Value = Current Assets − Total Liabilities. What's left for shareholders if every debt were paid today.
Working Capital (WC)
Current Assets − Current Liabilities. The short-term liquid cushion; the gap to NCAV is long-term debt.
Free Cash Flow (FCF)
The cash a business generates after operations and investments — the money truly available to owners.
P/E ratio
Price-to-Earnings: share price ÷ earnings per share. A rough gauge of how expensive a stock is relative to profits.
D/E ratio
Debt-to-Equity: total debt ÷ shareholder equity. How much leverage (debt) a company carries.
Dividend Yield (DY)
Annual dividend ÷ share price. A very high yield can signal the market expects a dividend cut.
Value Trap
A stock that looks cheap on the numbers but is cheap for a good reason — a business in genuine decline.

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