What it is
A single number summarising everything Buffett looks at on the "is this a good business?" side of the analysis (separate from "is the price right?"). Computed from:- ROIC (5-year average + TTM): rewarded above 12%, penalised below 5%
- Gross margin stability: 5-year standard deviation, lower is better
- Balance-sheet health: net debt/EBITDA, current ratio, interest coverage
- Earnings consistency: % of last 5 years profitable, max single-year EPS decline
- Growth quality: free-cash-flow growth, share-count discipline (no dilution)
How to read it
- 80–100: Excellent - Buffett-grade quality, the businesses you'd want to own forever
- 65–79: Good - solid businesses, often available at fair prices
- 50–64: Fair - average for the market, depends heavily on price
- < 50: Poor - structural problems, avoid unless deeply discounted