In the Information Age, it only makes sense that we hunger for more and more, well, information. That’s exactly what ICLUBcentral provides, whether that’s through our webinars, our ongoing, cross-country educational programs, or the tools on our website. Of course, for many investors, stock studies – like the Stock Selection Guide -- are key. But for those who want to delve even further into a company’s data – the retail and manufacturing industries in particular -- there’s the ever-popular Ratio Analyzer tool, which is available online at StockCentral.com and is also included with the ICLUBcentral Stock Analyst 3 software.

 

“The Ratio Analyzer provides additional information that the Stock Selection Guide and other analysis tools do not,” says Bob Adams, whose Annual Report Spreadsheet was the inspiration – and provided the basis -- for ICLUBcentral’s Ratio Analyzer tool. “It looks at, for example, accounts receivable, inventories, and the cost of sales.”

 

“I was reading Peter Lynch’s book, One Up on Wall Street, and a light bulb went off,” recalls Bob, who is a volunteer Director on the Board of InvestEd, Inc. and an Associate Director of the BetterInvesting Puget Sound Chapter. “I thought to myself, ‘why don’t I put this information on a spreadsheet and let the spreadsheet do the math? I can type in the data and the spreadsheet can do the rest.’ My Annual Report spreadsheet for the Manufacturing and Retail Industries (check it out at www.bob-adams.net) grew from that.”

 

That was nearly a decade ago. And Bob kept reading. “That really piqued my interest and I began reading other books about annual report data, and picking up tidbits here and there,” he says. “I went through books written by successful investors like Warren Buffett and Benjamin Graham with a question in the back of my mind: What do you look at when you analyze annual report data? As I became aware of the items that they thought were important – for example, Accounts Receivable and the number of days, on average, a company had to wait for payment -- I began adding them to my spreadsheet.

A former Director on the BetterInvesting National Computer Group Advisory Board, Bob taught the spreadsheet at the Group’s annual conference, Compufest. “Each year, it changed. I added information and figured out ways to make it more user-friendly." 

Early on, Bob eliminated the need for users to enter the data themselves. “Most spreadsheets are set up such that the user has to input the data,” he says. “I found a way to set up my spreadsheet so that now, all a user has to do is enter a ticker symbol. That’s a huge advantage.”

 

But even the best spreadsheets can be challenging for users. “It can often be difficult for anyone but the creator to use a spreadsheet,” Bob notes.

 

Then, ICLUBcentral caught wind of Bob’s Annual Report spreadsheet – and decided to adapt it to the ICLUB site. “At first, we were going to put it on the site as a spreadsheet,” Bob says. “But that presented a problem, as only investors with Microsoft Excel and running Windows could access the fully automatic data function.

 

“Then, Joe Craig (the ICLUB consultant who developed the Ratio Analyzer module) said, ‘Let’s make it an online tool so anyone can access it – no matter what computer platform they’re using.” 

 

And the rest, as they say, is history. Bob’s Annual Report spreadsheet graduated to an online Ratio Analyzer tool, eliminating the need for users to have a spreadsheet program and simplifying it.

 

If you’re looking for more in-depth information on a company, Bob’s Annual Report spreadsheet offers more information than the Ratio Analyzer. “The spreadsheet, for example, tells you who a company’s competitors are and how a company stacks up against its competition and the industry averages.”

 

He’s also added a summary list of bearish and bullish results – an idea he adapted from the Morningstar site. “Morningstar offers a summary list of bearish and bullish comments and I thought – why not add that to the spreadsheet? So, now you can eyeball the bullish and bearish results on the spreadsheet – it’s like a scorecard.”

Sometimes, though, more information ends up being too much information – especially if you’re new to investing. “It’s easy to feed new people too much information,” Bob says. “And easy for them to get discouraged by it.”

That’s one of the areas where the Ratio Analyzer has an advantage over Bob’s spreadsheet. “Once a beginning investor becomes familiar with the Stock Selection Guide, they can look at the information that the Ratio Analyzer provides and use it,” he says. “Like the SSG, the Ratio Analyzer doesn’t give you a ‘yes’ or a ‘no’ on a stock. It gives you ‘maybes’ – and you have to add your own judgment. But it certainly raises some flags -- both good and bad -- and that’s the main purpose.”

The Ratio Analyzer also offers information that’s more up-to-date. “The real advantage of the Ratio Analyzer is that it looks at the trailing four quarters,” Bob says. “My spreadsheet only looks at annual data – and that data may be up to a year old. With the Ratio Analyzer, you know that the data isn’t more than a quarter old.”

As is often the case, some investors prefer the Ratio Analyzer, others the Spreadsheet, and yet others alternate between the two. “The question remains – do you opt for the simple approach or do you dig deeper and look for more information,” Bob says. “There’s always an argument for either direction.”