Checklist before buying a scrip

This section includes a essential checklist that an investor should look in to before attempting a long term buy in order to ensure safety and descent returns on capital

The dictum in buying shares for long term investment is 

"GREAT COMPANIES AT GOOD PRICES"

Answer the following questions before buying a scrip!

Quality of the business

• Do you understand the kind of business the company is doing?
  
• Have you ever been to an outlet of the company (office, retail store etc.) ?
  
• Have you ever used a product the company sells?
  
• Is the company a consumer monopoly OR Is it the sort of a company you would first consider when you are planning to buy a product in its class?
  

Financial fundamentals

EPS 

• Is the EPS of the company consistently increasing over a period of at least 5 years?
  
• If yes what is the average yearly percentage rise in EPS over the last 5 years? 
  
• Is EPS/Share price an acceptable number in the context of valuing the company?