Brian Feroldi

Long Term Mindset

We teach stock pickers how to analyze businesses so they can manage their own money. Join 100,000+ investors who read our Wednesday newsletter. It's read by people who work at Andreessen Horowitz, Google, Microsoft, Morningstar, and more.

Founder

The Motley Fool

Helping the world invest. Better.

Covering the healthcare & technology industries for Fool.com.

Contract Writer & Contributor

Insulet Corporation

Growing sales, servicing existing accounts and expanding business relationships

Territory Manager

Creating and launching the website, creating and launching the trade show booth, controlling the labeling and documentation that supports the product

Product Manager

I demystify the stock market | Author, Speaker, Creator | 90,000+ investors read my free newsletter (see link)

Are you an investor?

Imagine if you could...

🔎 Find great businesses
🎯 Analyze them like Warren Buffett
⚖️ Value them to know if they are a "buy" or "sell"

If you could do this, then you could:

✅ Build a rock-solid portfolio
✅ Skyrocket your net worth
✅ Invest with confidence

The only problem: learning how to invest well can be incredibly confusing!

I should know. I've investing in individual stocks for 20+ years. 

I've made just about every investing mistake you can make.

Here are *some* of the challenges I faced along the way (can you relate?).

❌ Learning how to analyze financial statements
❌ Figuring out if a business was good, great, or gruesome
❌ Valuing a business to know if it is a buy or a sell

If you're facing these same challenges, I can help.

I teach investors just like you how to analyze businesses so you can invest with confidence.

I can say this with conviction because this is exactly what I've done for myself over the last 20 years.

I've built a market-beating portfolio from scratch, which has skyrocketed my net worth.

Now, I help other investors how to do the same thing by showing them how to analyze businesses like a pro.

Here's how I can help you:

🔎 ACCOUNTING: Find, read, and analyze a company's financial statements, fast
🧮 QUALITY: Use a simple checklist to tell if a business is good, great, or gruesome 
⚖️ VALUATION: Calculate the price of a business to know if it is a buy, sell, or hold
🧑‍🤝‍🧑 COMMUNITY: Connect with other investors to share ideas, lessons, and stories

Whether you’re just starting out on your investing journey or want to bring your skills to a new level, I’m here to help. 

Begin your investing journey today: longtermmindset.co

To get started, download my FREE accounting infographic ebook:
🔗 longtermmindset.co/fssebook/

-----------------------

FREE RESOURCES:

🎥 Youtube Videos: youtube.com/c/brianferoldiyt
📖 Accounting eBook: longtermmindset.co/fssebook/
✅ Investing Checklist: ngtermmindset.co/checklist/
--------------------

Questions? Comments?

Email: brian@longtermmindset.co

𝗪𝗵𝗮𝘁 𝗶𝘀 the 𝗔𝗹𝘁𝗺𝗮𝗻 𝗭-𝗦𝗰𝗼𝗿𝗲?
Here's everything you need to know:

📚 Grab my FREE accounting infographic ebook: 
🔗 → https://lnkd.in/giXnpNig

The Altman Z-Score is a formula developed by Edward Altman in the 1960s. It is used to predict the likelihood of a company going bankrupt within two years.

The Z-Score uses five different financial ratios to come up with a single number that measures the company's financial health.

Altman Z-Score breaks down into five major components:

• 𝗪𝗼𝗿𝗸𝗶𝗻𝗴 𝗖𝗮𝗽𝗶𝘁𝗮𝗹 𝘁𝗼 𝗧𝗼𝘁𝗮𝗹 𝗔𝘀𝘀𝗲𝘁𝘀 - A measure of 𝗹𝗶𝗾𝘂𝗶𝗱𝗶𝘁𝘆
• 𝗥𝗲𝘁𝗮𝗶𝗻𝗲𝗱 𝗘𝗮𝗿𝗻𝗶𝗻𝗴𝘀 𝘁𝗼 𝗧𝗼𝘁𝗮𝗹 𝗔𝘀𝘀𝗲𝘁𝘀 - A measure of 𝗽𝗿𝗼𝗳𝗶𝘁𝗮𝗯𝗶𝗹𝗶𝘁𝘆
• 𝗘𝗮𝗿𝗻𝗶𝗻𝗴𝘀 𝗕𝗲𝗳𝗼𝗿𝗲 𝗜𝗻𝘁𝗲𝗿𝗲𝘀𝘁 𝗮𝗻𝗱 𝗧𝗮𝘅𝗲𝘀 𝘁𝗼 𝗧𝗼𝘁𝗮𝗹 𝗔𝘀𝘀𝗲𝘁𝘀 - A measure of 𝗼𝗽𝗲𝗿𝗮𝘁𝗶𝗻𝗴 𝗲𝗳𝗳𝗶𝗰𝗶𝗲𝗻𝗰𝘆
• 𝗠𝗮𝗿𝗸𝗲𝘁 𝗩𝗮𝗹𝘂𝗲 𝗼𝗳 𝗘𝗾𝘂𝗶𝘁𝘆 𝘁𝗼 𝗧𝗼𝘁𝗮𝗹 𝗟𝗶𝗮𝗯𝗶𝗹𝗶𝘁𝗶𝗲𝘀 - A measure of 𝘀𝗼𝗹𝘃𝗲𝗻𝗰𝘆
• 𝗦𝗮𝗹𝗲𝘀 𝘁𝗼 𝗧𝗼𝘁𝗮𝗹 𝗔𝘀𝘀𝗲𝘁𝘀 - A measure of 𝗮𝘀𝘀𝗲𝘁 𝘁𝘂𝗿𝗻𝗼𝘃𝗲𝗿

With these components, you can understand if a company's risk of bankruptcy is due to issues with liquidity, profitability, operating efficiency, solvency, or asset utilization.

𝗛𝗲𝗿𝗲'𝘀 𝗮 𝗯𝗿𝗲𝗮𝗸𝗱𝗼𝘄𝗻 𝗼𝗳 𝘁𝗵𝗲 𝗳𝗼𝗿𝗺𝘂𝗹𝗮:
(1.2 × Working Capital/Total Assets)
+
(1.4 × Retained Earnings/Total Assets)
- 
(3.3 × EBIT/Total Assets)
+
(0.6 × Market Value Equity/Total Liabilities)
- 
(1.0 x Sales/Total Assets)
=
Altman Z-Score

Altman Z-Score RESULTS:

🔴 0.0 - 1.8 = Distress Zone
🟤 1.8 - 3.0 = Grey Zone
🟢 3.0 - 4.0+ = Safe Zone

Example:

Working Capital = $2,000
Total Assets = $10,000
𝗪𝗼𝗿𝗸𝗶𝗻𝗴 𝗖𝗮𝗽𝗶𝘁𝗮𝗹 𝘁𝗼 𝗧𝗼𝘁𝗮𝗹 𝗔𝘀𝘀𝗲𝘁𝘀 = 𝟮𝟬%

Retained Earnings = $3,000
𝗥𝗲𝘁𝗮𝗶𝗻𝗲𝗱 𝗘𝗮𝗿𝗻𝗶𝗻𝗴𝘀 𝘁𝗼 𝗧𝗼𝘁𝗮𝗹 𝗔𝘀𝘀𝗲𝘁𝘀 = 𝟯𝟬%

EBIT = $2,500
𝗘𝗕𝗜𝗧 𝘁𝗼 𝗧𝗼𝘁𝗮𝗹 𝗔𝘀𝘀𝗲𝘁𝘀 = 𝟮𝟱%

Market Value of Equity = $12,000
Total Liabilities = $5,000
𝗠𝗮𝗿𝗸𝗲𝘁 𝗩𝗮𝗹𝘂𝗲 𝗘𝗾𝘂𝗶𝘁𝘆 𝘁𝗼 𝗧𝗼𝘁𝗮𝗹 𝗟𝗶𝗮𝗯𝗶𝗹𝗶𝘁𝗶𝗲𝘀 = 𝟮.𝟰

Sales = $20,000
𝗦𝗮𝗹𝗲𝘀 𝘁𝗼 𝗧𝗼𝘁𝗮𝗹 𝗔𝘀𝘀𝗲𝘁𝘀 = 𝟮𝟬𝟬%

𝗔𝗹𝘁𝗺𝗮𝗻 𝗭-𝗦𝗰𝗼𝗿𝗲 = (1.2 × 20%) + (1.4 × 30%) + (3.3 × 25%) + (0.6 × 2.4) + (200%) = 4.925

4.925 = SAFE ZONE

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