Proper Method of Screening for New Investments and Conducting Due Diligence on Existing Holdings??

I’m new to my current area of finance. While I’ve worked in different areas of finance over the last few years, I was recently hired as an investment analyst, but I’ve discovered that my job isn’t really that of an investment analyst’s… (it’s really just data entry.) I’m interested in becoming an actual investment analyst… or investment banker, asset manager, private equity analyst, venture capital analyst, or equity research associate… and I’m trying to teach myself what’s involved in these occupations. Specifically for the purpose of this post, I’m trying to figure out the correct /professional way of screening for new investments and conducting due diligence on existing holdings; I’ve come up with the following list, but I want to make sure that I’m not including anything that doesn’t need to be included, and I also don’t want to miss anything.

Does anyone know if the following method is the correct / professional way of screening for new investments and conducting due diligence on existing holdings? Am I missing anything?... or including anything that isn’t required?

• Start by using a stock screener, news, and macro trends to identify potential stocks.

• Once you find some stocks of interest, conduct quantitative research by pulling and looking at the companies’ 10K’s and 10Q’s for the financial ratios / performance. Then do the following:

• Calculate the gross profit margin.

• Calculate revenue growth.

• Calculate Earnings per share.

• Calculate debt levels: o Calculate EBITDA. o Calculate the debt-to-equity ratio. o Calculate the debt-to-EBITDA ratio. o Calculate the cash interest coverage. o Calculate the EBITDA-CapEx Interest Coverage. o Calculate the Fixed Charge Coverage Ratio.

• Calculate Inventory: o Calculate Days Sales of Inventory. o Calculate inventory turnover. o Calculate the inventory to sales ratio

• Calculate Sales vs. Receivables: o Calculate the accounts receivable to sales ratio.

• Calculate Cash Flow from Operations: o Calculate operating cash flow.

• Calculate the return on equity.

• Determine the company’s core business focus: o Make sure the company has only 1 or 2 business segments.

• Subsidiaries: o Make sure the company doesn’t have too many subsidiaries. If there are too many subsidiaries then it could be a sign of the company siphoning off money.

• Conduct qualitative research by looking at the following: o How does the company make money?... look at the business model to find out. o Does this company have a competitive advantage? o How good is the management team? o How does the company handle corporate governance?

• Look at historical data to compare your current quantitative and qualitative data to that of the past to develop a better / fuller picture.

• Then compare the quantitative data / ratios to the industry averages, and other companies in the same or similar industry.

• Then run a DCF analysis in order to estimate the value of a company based on its future cash flows.