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Global Financial Index
Updated
Introducing the "Global Financial Index" indicator on TradingView, a meticulously crafted tool derived from extensive research aimed at providing the most comprehensive assessment of a company's financial health, profitability, and valuation. Developed with the discerning trader and investor in mind, this indicator amalgamates a diverse array of financial metrics, meticulously weighted and balanced to yield optimal results.
Financial Strength:
Financial strength is a cornerstone of a company's stability and resilience in the face of economic challenges. It encompasses various metrics that gauge the company's ability to meet its financial obligations, manage its debt, and generate sustainable profits. In our Global Financial Index indicator, the evaluation of financial strength is meticulously crafted to provide investors with a comprehensive understanding of a company's fiscal robustness. Let's delve into the key components and the rationale behind their inclusion:
1. Current Ratio:
2. Debt to Equity Ratio:
3. Interest Coverage Ratio:
4. Altman Z-Score:
Profitability Rank:
Profitability rank is a crucial aspect of investment analysis that evaluates a company's ability to generate profits relative to its peers and industry benchmarks. It involves assessing various profitability metrics to gauge the efficiency and effectiveness of a company's operations and management. In our Global Financial Index indicator, the profitability rank segment is meticulously designed to provide investors with a comprehensive understanding of a company's profitability dynamics. Let's delve into the key components and rationale behind their inclusion:
1. Return on Equity (ROE):
2. Gross Profit Margin:
3. Operating Profit Margin:
4. Net Profit Margin:
Valuation Rank:
Valuation rank is a fundamental aspect of investment analysis that assesses the attractiveness of a company's stock price relative to its intrinsic value. It involves evaluating various valuation metrics to determine whether a stock is undervalued, overvalued, or fairly valued compared to its peers and the broader market. In our Global Financial Index indicator, the valuation rank segment is meticulously designed to provide investors with a comprehensive perspective on a company's valuation dynamics. Let's explore the key components and rationale behind their inclusion:
1. Price-to-Earnings (P/E) Ratio:
2. Price-to-Book (P/B) Ratio:
3. Dividend Yield:
4. Discounted Cash Flow (DCF) Analysis:
Earnings Transparency:
Mitigating the risk of fraudulent financial reporting is crucial for investors. The indicator incorporates the Beneish M-Score, a robust model designed to detect earnings manipulation or financial irregularities. By evaluating various financial ratios and metrics, this component provides valuable insights into the integrity and transparency of a company's financial statements, aiding investors in mitigating potential risks.
Overall Score:
The pinnacle of the "Global Financial Index" is the Overall Score, a comprehensive amalgamation of financial strength, profitability, valuation, and manipulation risk, further enhanced by the inclusion of the Piotroski F-Score. This holistic score offers investors a succinct assessment of a company's overall health and investment potential, facilitating informed decision-making.
The weighting and balancing of each metric within the indicator have been meticulously calibrated to ensure accuracy and reliability. By amalgamating these diverse metrics, the "Global Financial Index" empowers traders and investors with a powerful tool for evaluating investment opportunities with confidence and precision.
This indicator is provided for informational purposes only and does not constitute financial advice, investment advice, or any other type of advice. The information provided by this indicator should not be relied upon for making investment decisions. Trading and investing in financial markets involves risk, and you should carefully consider your financial situation and consult with a qualified financial advisor before making any investment decisions. Past performance is not necessarily indicative of future results. The creator of this indicator makes no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the indicator or the information contained herein. Any reliance you place on such information is therefore strictly at your own risk. By using this indicator, you agree to assume full responsibility for any and all gains and losses, financial, emotional, or otherwise, experienced, suffered, or incurred by you.
Financial Strength:
Financial strength is a cornerstone of a company's stability and resilience in the face of economic challenges. It encompasses various metrics that gauge the company's ability to meet its financial obligations, manage its debt, and generate sustainable profits. In our Global Financial Index indicator, the evaluation of financial strength is meticulously crafted to provide investors with a comprehensive understanding of a company's fiscal robustness. Let's delve into the key components and the rationale behind their inclusion:
1. Current Ratio:
- The Current Ratio serves as a vital indicator of a company's liquidity position by comparing its current assets to its current liabilities.
- A ratio greater than 1 indicates that the company possesses more short-term assets than liabilities, suggesting a healthy liquidity position and the ability to meet short-term obligations promptly.
- By including the Current Ratio in our evaluation, we emphasize the importance of liquidity management in sustaining business operations and weathering financial storms.
2. Debt to Equity Ratio:
- The Debt to Equity Ratio measures the proportion of a company's debt relative to its equity, reflecting its reliance on debt financing versus equity financing.
- A higher ratio signifies higher financial risk due to increased debt burden, potentially leading to liquidity constraints and solvency issues.
- Incorporating the Debt to Equity Ratio underscores the significance of balancing debt levels to maintain financial stability and mitigate risk exposure.
3. Interest Coverage Ratio:
- The Interest Coverage Ratio assesses a company's ability to service its interest payments with its operating income.
- A higher ratio indicates a healthier financial position, as it implies that the company generates sufficient earnings to cover its interest expenses comfortably.
- By evaluating the Interest Coverage Ratio, we gauge the company's capacity to manage its debt obligations without compromising its profitability or sustainability.
4. Altman Z-Score:
- The Altman Z-Score, developed by Edward Altman, is a composite metric that predicts the likelihood of a company facing financial distress or bankruptcy within a specific timeframe.
- It considers multiple financial ratios, including liquidity, profitability, leverage, and solvency, to provide a comprehensive assessment of a company's financial health.
- The Altman Z-Score categorizes companies into distinct risk groups, allowing investors to identify potential warning signs and make informed decisions regarding investment or credit exposure.
- By integrating the Altman Z-Score, we offer a nuanced perspective on a company's financial viability and resilience in turbulent market conditions.
Profitability Rank:
Profitability rank is a crucial aspect of investment analysis that evaluates a company's ability to generate profits relative to its peers and industry benchmarks. It involves assessing various profitability metrics to gauge the efficiency and effectiveness of a company's operations and management. In our Global Financial Index indicator, the profitability rank segment is meticulously designed to provide investors with a comprehensive understanding of a company's profitability dynamics. Let's delve into the key components and rationale behind their inclusion:
1. Return on Equity (ROE):
- Return on Equity measures a company's net income generated relative to its shareholders' equity.
- A higher ROE indicates that a company is generating more profits with its shareholders' investment, reflecting efficient capital utilization and strong profitability.
- By incorporating ROE, we assess management's ability to generate returns for shareholders and evaluate the overall profitability of the company's operations.
2. Gross Profit Margin:
- Gross Profit Margin represents the percentage of revenue retained by a company after accounting for the cost of goods sold (COGS).
- A higher gross profit margin indicates that a company is effectively managing its production costs and pricing strategies, leading to greater profitability.
- By analyzing gross profit margin, we evaluate a company's pricing power, cost efficiency, and competitive positioning within its industry.
3. Operating Profit Margin:
- Operating Profit Margin measures the percentage of revenue that remains after deducting operating expenses, such as salaries, rent, and utilities.
- A higher operating profit margin signifies that a company is efficiently managing its operating costs and generating more profit from its core business activities.
- By considering operating profit margin, we assess the underlying profitability of a company's operations and its ability to generate sustainable earnings.
4. Net Profit Margin:
- Net Profit Margin measures the percentage of revenue that remains as net income after deducting all expenses, including taxes and interest.
- A higher net profit margin indicates that a company is effectively managing its expenses and generating greater bottom-line profitability.
- By analyzing net profit margin, we evaluate the overall profitability and financial health of a company, taking into account all expenses and income streams.
Valuation Rank:
Valuation rank is a fundamental aspect of investment analysis that assesses the attractiveness of a company's stock price relative to its intrinsic value. It involves evaluating various valuation metrics to determine whether a stock is undervalued, overvalued, or fairly valued compared to its peers and the broader market. In our Global Financial Index indicator, the valuation rank segment is meticulously designed to provide investors with a comprehensive perspective on a company's valuation dynamics. Let's explore the key components and rationale behind their inclusion:
1. Price-to-Earnings (P/E) Ratio:
- The Price-to-Earnings ratio is a widely used valuation metric that compares a company's current stock price to its earnings per share (EPS).
- A lower P/E ratio may indicate that the stock is undervalued relative to its earnings potential, while a higher ratio may suggest overvaluation.
- By incorporating the P/E ratio, we offer insight into market sentiment and investor expectations regarding a company's future earnings growth prospects.
2. Price-to-Book (P/B) Ratio:
- The Price-to-Book ratio evaluates a company's market value relative to its book value, which represents its net asset value per share.
- A P/B ratio below 1 may indicate that the stock is trading at a discount to its book value, potentially signaling an undervalued opportunity.
- Conversely, a P/B ratio above 1 may suggest overvaluation, as investors are paying a premium for the company's assets.
- By considering the P/B ratio, we assess the market's perception of a company's tangible asset value and its implications for investment attractiveness.
3. Dividend Yield:
- Dividend Yield measures the annual dividend income received from owning a stock relative to its current market price.
- A higher dividend yield may indicate that the stock is undervalued or that the company is returning a significant portion of its profits to shareholders.
- Conversely, a lower dividend yield may signal overvaluation or a company's focus on reinvesting profits for growth rather than distributing them as dividends.
- By analyzing dividend yield, we offer insights into a company's capital allocation strategy and its implications for shareholder returns and valuation.
4. Discounted Cash Flow (DCF) Analysis:
- Discounted Cash Flow analysis estimates the present value of a company's future cash flows, taking into account the time value of money.
- By discounting projected cash flows back to their present value using an appropriate discount rate, DCF analysis provides a fair value estimate for the company's stock.
- Comparing the calculated fair value to the current market price allows investors to assess whether the stock is undervalued, overvalued, or fairly valued.
- By integrating DCF analysis, we offer a rigorous framework for valuing stocks based on their underlying cash flow generation potential.
Earnings Transparency:
Mitigating the risk of fraudulent financial reporting is crucial for investors. The indicator incorporates the Beneish M-Score, a robust model designed to detect earnings manipulation or financial irregularities. By evaluating various financial ratios and metrics, this component provides valuable insights into the integrity and transparency of a company's financial statements, aiding investors in mitigating potential risks.
Overall Score:
The pinnacle of the "Global Financial Index" is the Overall Score, a comprehensive amalgamation of financial strength, profitability, valuation, and manipulation risk, further enhanced by the inclusion of the Piotroski F-Score. This holistic score offers investors a succinct assessment of a company's overall health and investment potential, facilitating informed decision-making.
The weighting and balancing of each metric within the indicator have been meticulously calibrated to ensure accuracy and reliability. By amalgamating these diverse metrics, the "Global Financial Index" empowers traders and investors with a powerful tool for evaluating investment opportunities with confidence and precision.
This indicator is provided for informational purposes only and does not constitute financial advice, investment advice, or any other type of advice. The information provided by this indicator should not be relied upon for making investment decisions. Trading and investing in financial markets involves risk, and you should carefully consider your financial situation and consult with a qualified financial advisor before making any investment decisions. Past performance is not necessarily indicative of future results. The creator of this indicator makes no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the indicator or the information contained herein. Any reliance you place on such information is therefore strictly at your own risk. By using this indicator, you agree to assume full responsibility for any and all gains and losses, financial, emotional, or otherwise, experienced, suffered, or incurred by you.
Release Notes
Minor UpdateRelease Notes
Small bug fixedRelease Notes
Minor bug fixed, sorry...Release Notes
Small bugs fixed :)Release Notes
Minor bug fixed: adjusted PER and PB ratio for FQ data.Release Notes
Major UpdateRelease Notes
I increased the font size in the "Large" option.Release Notes
Minor UpdateRelease Notes
Major Update: Market Trend AddedRelease Notes
Minor Update:The weighting for the Overall Score has been adjusted
Release Notes
I have added ratios in the calculation of Financial Strength and Growth, and I have refined the weighting.Release Notes
Major Update:From now on, all standardizations of ratios will consider the specific industries of the companies being assessed. For instance, the evaluation of the Price-to-Earnings Ratio (PER) will differ depending on whether the selected company is in the financial sector or the technology sector.
Additionally, the weighting of calculations for key scores such as Financial Health, Profitability, Valuation, and Growth will also be adjusted according to the industry of the evaluated company. This means that our analysis will now be more tailored and accurate, reflecting the unique characteristics and performance metrics of different sectors.
This update ensures that our evaluations are more precise and relevant, providing better insights and value to our users.
Release Notes
Minor Update:- Added "Fair Value" option.
- Revised score standardization and weighting calculations.
Release Notes
Minor UpdateRelease Notes
Minor Update:- Added difference between Fair Value and current price to the table
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Minor Update:- Improved translations
Release Notes
Minor bug fixed.Release Notes
Minor UpdateRelease Notes
Minor Update: Sector Weighting Revised for Overall ScoreRelease Notes
Minor UpdateRelease Notes
Minor UpdateRelease Notes
Small bugs correctedRelease Notes
Minor update: Fixed a few bugs and added an option to display all financial metrics and ratios.
Disclaimer
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