Quant Concepts: Strong balance sheet strategy

How well do companies with solid books perform? CPMS's Emily Halverson-Duncan investigates with a universe of U.S. stocks

Emily Halverson-Duncan 14 February, 2020 | 1:31AM

 

 

Emily Halverson-Duncan: Welcome to Quant Concepts. Equity analysts often make references to different ratios they use to determine whether a stock is a buy or a sell. These ratios are created from information derived from many different sources, one of which is a company's balance sheet. Recall that the balance sheet is a statement outlining a company's assets, liabilities and shareholder equity. Analysts use the information available in the statement to help them make their decision surrounding whether or not that company is a worthwhile investment. Today's strategy is going to look for companies with strong balance sheets in the CPMS U.S. universe and see how that model would have done over time. So, let's take a look at how to build that.

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About Author

Emily Halverson-Duncan  Emily is Director, CPMS Sales at Morningstar

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