How to Choose Stocks: Understanding Financial Statements in the Stock Market | Jae Lee | Skillshare

How to Choose Stocks: Understanding Financial Statements in the Stock Market

Jae Lee, I post more on yt, follow me there!

How to Choose Stocks: Understanding Financial Statements in the Stock Market

Jae Lee, I post more on yt, follow me there!

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9 Lessons (32m)
    • 1. Intro: How Do I Buy Stocks like Warren Buffet?

    • 2. Quick Disclaimer Before We Start

    • 3. Yahoo Finance: Get Familiar

    • 4. Profit Margins: Consistency is Key

    • 5. SGA Expenses: 30-80%?

    • 6. Debt To Shareholder's Equity: Not Too High

    • 7. Tax: Let's Check Integrity

    • 8. ROE: We Want More!

    • 9. Capital Expenditure: Expansion is Awesome

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About This Class

How does Warren Buffet read financial statements? If you ever asked yourself this question, this is the perfect course for you. I have picked the important points from the book, "Warren Buffet and the Interpretation of Financial Statements" by Mary Buffet and David Clark, and summarized it in this Skillshare course. I will step by step guide you through model financial sheets and talk about the numbers and traits you look for when you value a company's stock price like Warren Buffet.

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Jae Lee

I post more on yt, follow me there!


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1. Intro: How Do I Buy Stocks like Warren Buffet?: you've all heard of war. But the legendary investor that has a net worth over $80 billion just from Messing. And you probably wondered, How can I invest like him? How water has two traps and tricks that makes him so successful in the stock market? Well, Mary Buffett, Warren Buffett's daughter in law, has written a book that basically concisely describes Lauren's little tips and tricks that he looks for in financial statements when he looks for a country that he's trying to invest in. And this is the book. It's a very simple book. It gives you the things to look for, the things to search for, the numbers to calculate and what these numbers have to be to be considered a good company , very straightforward book that basically tells you what to look for in financial statements . I have gotten the key findings and important numbers to look for and basically concentrated it into this skill share, of course, and throughout the video, I'm gonna be sharing my screen how to look for numbers, how to calculate those numbers, things like profit margins, things like total liabilities to shareholders equity ratio, things like capital expenditure to net earnings ratio. And these numbers are you always heard of but didn't know how Catholic. I have made each specific video calculating these numbers and what numbers you're trying to look for when you when it comes to accompany your trying to invest. So before you invest in the stock just cause your friends were talking about it you want to do this research, go through my videos and apply this financial statement analysis on each company that you're investing so that you're not just shooting in the dark and you know what you're actually going for. So join me in this course to find how to value stocks and how to find companies with a competitive, durable advantage. 2. Quick Disclaimer Before We Start: before I started with the videos, I wanted to record this short video to tell a guy's just a few warnings and I guess, disclaimer Before you guys take this advice when I'm talking videos, I usually say something like The book suggests that you want to keep your capital expenditures over your net annual earnings income ratio under 50%. And just because the company has this trait doesn't mean it's a company that you immediately go in and best for every piece number that I talk about in this video, you guys have to do your own research, right? Just because a company has a trait or doesn't have a treat doesn't mean it's a good company and vice versa. Bad company. Just because the company has this good trade doesn't mean it's the best time you ever been at best. And you're going to see immediate results. No. Once it has a good trait or a bad trade, you're gonna have to research. Does this good trade actually makes sense. There's this bad trade options make sense. So, for example, let's say Apple has a lot of debt, which is is it which is a tree that we don't want to look for a company. Does that mean we're not gonna invest in Apple now? We're gonna do our research, and we realize that we after we disagree. Sure, we realize that. Okay, Apple has a lot of that because that's are cheap this year or that's are easy to get this year. That's why Apple is spending all of its money to get that's now. So it's easier later. You know, there are underlying issues that make bad traits not so bad and also, in the other hand, good trades. Not very good, you know. So every number that I tell you in this course doesn't mean you just go and run with it. Just because of the book says it's under 50% you just run with it. You guys have to do your own research. And lastly, I just want to make a disclaimer that I am not a financial adviser on Lee, giving you the information that comes from the book of Warren Buffett and his interpretation of financial statements. So I'm not responsible for any kind of losses or any kind of gains that you guys make with in the stock market and I just wanted to put that disclaimer out there and please enjoy the rest of these video really helped me choose my stock personally and even more about it. 3. Yahoo Finance: Get Familiar: in this incident. Of course I'm gonna talk about how do you navigate through financial statements first, Before we talk about any numbers, any metrics or any quantitative data we're gonna go through what, what site To use, how to never get the financial statements first. And this is gonna be referenced throughout the entire course. So you want to make sure you know 100 weight through this before you continue to the next video. First, you want to go to the finance at yahoo dot com. Personally, I think Yahoo Finance is really simple, Easy to understand. People were just starting with the stock market stock market because not only is a simple, but it's you don't need to sign up for anything, just I don't have an account, and I'm still able to access these data. I do acknowledge the fact that you need a premium account, so basically a paid account to access more data, but still, I think they still give you four years worth of data, which is can be risky. But I think it is enough for people who are just starting out in order to search for a company. They're just gonna go thrusters. Far unsearched either, but a ticker or company name. Honestly, Tucker's being like, if it's Apple, a P l is the ticker. So we're gonna use Apple for today's example. You're brought to this page. So this page is basically just showing the General Information company just like the summer , Basically what it says here the name of the company that present one share the percentage increase in all these other data. What? We're going to reference rob constantly throughout this. This course is basically this tab right here. That's his financials and financials. I'm gonna be brought to three stab income statement balance in Castle, and I'm gonna go through each one of these about the course. I just wanted to show you what the general outline looks like so that you could use this first video to get familiar with the platform of Yahoo Finance 4. Profit Margins: Consistency is Key: Now that we're familiar with the Yahoo Finance platform, we're gonna talk about the first numeric data that we're gonna look for it and financial statements. And that is profit margins, specifically gross profit emergence. So what profit margin is, basically, is how much of your total revenue is actually profit. Because obviously in the world of business, when you make revenue, it's not that you're getting all of the irony that obviously took you some money to get more money. All right, So if I have sold a lemonade at $10 it took me $2 to get the materials, I didn't make $10. I mean, $8 right? And Rose profit margins allows us to value a company on how much of their revenue is getting. Are they getting as profit, right? Because, you know, a company that stands $10 that spends $8 to make $10 is obviously less advantageous for a company, Fenix. $10 but only spend $2 on cost. So the first thing you want so to I'm gonna share this experience is the income statement and the income statement has all the information about how much the red total revenue. Things I told revenue totaled, preventing before tax too, big senator. But what you want to focus on here is just I think this is another reminder. Obviously way. Just don't want to look at the trailing, told one Caesar thes air for just to get a general summary of the idea. But we want to look for consistency, which is important because if you own a stock and the company only did create one year, you're gonna lose money the next year or the other good in future years hover. If you see a company that's consistently getting good value on a good profit margins consistently, that means, in other words, if a company has been doing good for 100 years, it's probably gonna do good for the next 100 years. However, if the company has been doing getting back problem Martin for 100 years and gun one good probably margin one year. You don't want to put your bet on the next year because for the 100 years 101 times they've been bad 100 only one time so well, we're trying to look for his consistency. That's why you want to use this two dozen four years. Patten, however I get gross profit margin is basically the gross profit over the total reading and , in other words, this tab right here. Most profit over total ready. So for two dozen thinking, how would it help? However, that is 93 0 it's every 98. Anybody from your 60 now? Obviously, I'm getting rid of like the small numbers obviously went. Once you're talking about millions of dollars, you know you can add it, but you'll still get a pretty good idea just using the 1,000,000 millions. It's not like the percentage is gonna change just drastically. So in other words, let's say I added 2000 and think that this 260 million on just every 4000 obviously a percentage still stays pretty the same. So the point is you could just take the 1,000,000 million values and get the percentage. So for Apple, in this case, they got a percentage of 30 around 38% and that means 38% of their total revenue they're getting as profit. I think this is important is because the higher percentage that a company gets and profit means they have more cash to spend on research or maybe dividends. Maybe they're investing in their own company again. For the more profit that the company sees, they're able to extend their company better, which to investors are awesome, you know, or investing in this company so that it can expand it right? So that's why this is important and a good general rules. According to the one of interpretation interpretation of financial statements, the book says around 40% is in good number to hang on now. This is only good. It's consistently 40%. So let's say, healthy years. They had 20% of gross profit margins and two doesn't 19. They had 40%. That doesn't really mean anything. However, if they've been consecutively consistently getting 40% on the year two down 16 40% 17 and on and on. That's when you know. Okay, this is actually consistent and 40% and this is a pros problem. Murder that I can trust to some of gross profit margin is gross profit over the total revenue, and you want to keep this around 40%. On the most part of that here is consistently you want to make sure it's 40% every year rather than 20% to see a 20% the next year, 40% 1 year back to 20%. That is not that they advantageous for a company. 5. SGA Expenses: 30-80%?: in this section. Of course, we'll be talking about S E expenses. MSU expenses are basically not the word for selling general and administrative expenses. So basically what? The company uses money on things like advertisements, research and development Commission's salaries. Any, like the name suggests any expenses geared towards selling general administrations is called the SG expenses. Now, the what we're gonna complete today is basically the SDA proportion to gross profit. So how much personal? What percentage of the gross profit is the company spending on selling general and administrative expenses? Right. So I I'm gonna bring you to finance on yahoo dot com toe Look at any company's financial statement. So here we're looking at the Coca Cola Company, which is known for having a great competitive, durable advantage. I will explain to you in a second has a good double advantage, but we're going to do the calculation here first, So we're gonna spoke to two dozen 19. Like I said, we're gonna do SG a over gross profit. When you first load the financial statement, it's gonna say operating senses. Just click the arrow here and you see this only general administrative costs. Now you can break this sound even further. We don't have to do that for this calculation. That's let's calculate the SJ proportion for 2018. So it was 12 million of S U expenses into the 18 and they made a gross profit of 22 million that year, which is around 54 50 50%. Let's look at 22,018. 10 million over 20 million. Clearly that's around 50%. 12 million over 22 million there you before, which is also 50% safer done. 16 50 a little more than 50%. But the important thing I want to highlight here is basically, Coca Cola is spending consistently around 50% of SG expenses over the rules profit. We know that this is a competitive, durable advantage because we know this company isn't very so much on extra expenses as in their consistently spending the same amount of money on SG expenses, but their profits are increasing. So that just goes to show that for Coca Cola at the biggest reason for Coca Cola, Coca Cola can do this is because I didn't have to spend that much money on research and development, right You know, companies like IBM always has to innovate the next new computer, but for Coca Cola, they don't need to invent the next pope. Already, buildings, people look love your original cookery. So that's why Coca Cola is able to keep this consistent proportion of SG expenses to gross profit. Now take a company like Ford, for example. Ford had a extra expenses that was around 78%. That jumped to 700%. So that's a tenfold increase ring. That's two very for a company with a competitive terrible advantage. That means for you don't know, maybe you invest the year that four used 2nd 8% of its extra expenses, but it jumped to 780. That means the company is struggling to stay in line with the competitors if they're spending a lot of one year in the two little the next year. They're two very, which means the struggling to stay with the competitors, and we never want to invest our money as investor. We never want toe investor money and a company that struggling to stand level their competitors. So you're asking. So what is the exact percentage is that we're looking for obviously lower there. And if it's low consistently, that's the best case day. The exact percentage a lot of companies with competitive dribble advantages are have as she expensive proportions around 30 to 80%. Now, just because they're 80% another company's 30% doesn't mean that company with 30% better. Just important thing to highlight here is it is that it's consistently if it's so very that is, they're trying new things. They're spending their not consistently spending extra expenses. The struggle over if this SJ expenses goes over 100% so they're spending more on expenses than they're getting as gross profit. That's a problem for a company that means they are spending more to immunity and making profit is great that they're innovating. But what's the point of innovating if you can't make a profit of the company as the investor? That's terrible. If we invest in a company that can't generate profit rate, so obviously keep it around 30 make sure it never goes up 200. That is the percentages that you want a key when you calculate as she expenses and grows from, and just to wrap up this video tape of last time just to reiterate it one more time as she expenses could be around 30 to 80% but it has to be consistent. 6. Debt To Shareholder's Equity: Not Too High: in this section. Of course, I'm gonna be talking about that to shareholders equity ratio. What that means is basically getting the total liabilities of a company and dividing that by the shareholders Equity race, Brick equity. These values are easy to find on the financial statements and what the debt to shareholders equity ratio means is basically, for every dollar that is going into the shareholders equity, there will be the X amount of. So, let's say X is that to shareholders equity ratio. So for every dollar that goes into the shelters equity, there will be the X amount of dollars that goes in debt, right? So, obviously, clearly, as I said before, we don't want companies with a lot of debt because they are dangerous and prone to destruction when it comes to recessions, which someday will come. So we always want this number to be low. So remember lower the better lower the number of the dead to shareholders equity ratio. We know that this company has a more durable advantage, durable, as in, they don't have to go into so much debt when they get out. Show shareholders equities. Right. So I'm gonna teach you how to find that in a financial statement record high screen. And then right here we are back to finance at yahoo dot com. Today is somebody we're just gonna look at Tesla. So let's see. And by the way, just a disclaimer just after. Just remember, when I show these companies for examples, it's not something I recommend or, you know, I don't recommend lately don't suggest it's just I'm just using it as a really unusual example. Financials. Now we're going to start stepping in the zone of balance sheets so you're gonna quit financials but could balance sheet from now. And so some YouTube has, but it just breaks down into a lot of different categories. So to find total liabilities, your total liabilities on you can see live another life, that liability and this is the total liabilities. So 20 around 20 some 1,000,000 for Tesla and the year of two dozen 19 and on stockholders equity, this put this down when you see here 6.6 million for test. All right, so we're going to about 26 27 6 which is around four. This is unhealthy, and some companies can go to you know, in the $40 range, that's when it gets really dangerous and it loses that revenge. Now this is a point that I do concede is that it is. The books adjust that companies with debt to shareholder equity ratio should be around 0.80 is a natural number because that means for every dollar you spend your spending less than a dollar. You're spending 80 cents on 10 which is crazy. Good, right? But the thing is, it's extremely hard to find company to have a such a low number of a debt shuttled his conclusion ratio, and this is the same goes for financial institutions. So I'm talking about thanks. They usually have ship that to shovel the factory. Sure, that goes up to around the two tens writes like $7.10 dollars when I see Tesla and I see the $4 that debt to shareholders equity ratio and my totally fishing test a lot. No, because this is a tech company, right? It has to be innovated. It's gonna spend a lot of money on research and development. So I do understand why they have so much debt and that's similar to the last section. Whether research comes in and just want to explain how you calculate that ratio to know how much a companies spending. There's a second thing I want to talk about. This video is in the balance sheet. I don't want to make a separate video, but because this is really just a quick point, once you go to the balance sheet, you also want to check the company's inventories. So if you total assets current assets and here inventory now, it's always great if the material company is always increasing right. The reason why the mentoring increases because whatever their profit is doing more of it. That's why they need more inventory, right? So this is always a good sign on for Tesla is a great like It goes from two million to to go into the next year to 3.1 next year, 3.5. These are really fast of immature increases as long as it there's an upward trend, you can see OK, this company has a competitive advantage because it's if it's a mentor staying still, that means they're safe selling the same amount every year, which doesn't mean that their stock price is gonna go there. You sure they're a great company? They can consistently get those sales. But if it's not increasing, what's the point of investing? Right? So there's two things I want to talk about. This video, which has a debt to shareholders equity ratio, keep it up, keep it on their 0.8. But I do concede that is extremely hard to find. That number and number two Cos inventory should be always increasing to have a competitive dribble bench. 7. Tax: Let's Check Integrity: in this section. Of course, I'm gonna be talking about texts. Like all American citizens, American companies also have to pay income tax. And a good number two bay cellphone is around 35%. The 35% of a company's pretax income should be their income tax expense. Now pull up another financial statement with you guys. You want goto operating expenses, open that up and see income before tax. This is the number. This is the number that the ends against. Like the name suggests the income before they do any kind of Texas expenses. So for 7 32,018 Amazon reported eight income before tax of 40 million. Now that means 30 35% of that should be their income tax expense, right? So let's complete 40 million times. Oh point, which is 5% of 14 which is around five million. So technically, Amazon should be paying around five million text expenses. But here you go to the bottom type. Here it says 2.374 That's not even half of five million right now that this discrepancy happens, this is where you ask questions. Start asking questions now like ditch this stock or the company immediately. No, no, no. There are a lot of companies with competitive durable banish that don't have their tax expenses and protect income aligned. This discrepancy is very common, even in good companies that you would invest in. The reason why we find this discrepancy, though, is you want to find a reason so you might search on Google Amazon tax expense 2019 texts income discrepancy of difference in 2019 Such these keywords and do your own research why this happened? You know, even good companies. You know there are a lot of reasons why you wouldn't pay taxes. Maybe borrow money. This year was too expensive. Maybe it was too cheap. You know, there are billions of reasons why this might happen. This is where you conduct your own research. So the important thing about this, this testing is this bait. This stage is basically you are testing a company's integrity, but it doesn't mean you have to ditch it completely. You know, you this kind of shows you if you need to start doing research or not Cos without competitive variable advantages don't have this lined up is because there are many companies that spend their time faking these financial numbers. Now what is he thinking? These, I don't know, best selling nothing. They sell fake products like fake food felons. What I'm saying is they make it look like to the investor that they're a very couple. There is very durable company when in fact they're cutting cost somewhere else. And that might be to make themselves have a very high profit margin like we've talked about in the previous video. They might have really high debt, right? Which is that means they're not durable when like a recession comes. That means they're screwed, right? If they hide that the same goes for taxes. In order for a company to make it look like their high profit margins, they might pay no taxes this year. Now that's very questionable, right, and it makes the company look very lose a lot of integrity. In other words, durable competitive companies don't have to do this is because they're already putting out good profit margin valleys were good financial ratio or, you know, favorable ratios, even while ping the correct amount of Texas, and in addition to that they don't have time to fix these numbers. They're busy making good revenue, right? That's where this discrepancy comes here and why you want a search or research. Why company has this discrepancy? Because having this discrepancy shows that, hey, they are. They are missing something, right? But it might be a for religious reasons to sum up, you want to make sure that 35% of companies income before taxes there in context expenses. And if not, that's when you start asking questions. And always remember, companies with durable advantages don't have to lie about the numbers because they're already producing results while having integrity. This is only something you want to check when it comes to evaluating, uh, company. 8. ROE: We Want More!: in this section of the course, I'm going to talk about return on shareholder's equity issue. It's very easy to calculate. It's basically getting a net income of the company to fighting it by the shareholders Equity of that year. Now under quote the book for this because I think the book does a good job explaining it. High Returns on equity means that the company is making good use of the earnings that it is retaining As time goes by. Here's importer part thes High returns on equity will add up and increase the underlying value of the business, which over time will eventually be recognized. Stock market through the increase in price. One company stock. As time goes by, these high returns on equity will add up and increase the underlying value of the business . When the this book was written, cool headed return on shareholder's equity of 30% regularly had 24. Her sheets every three and Pepsi 54 30 to 20% is a good number. Now. I don't when I say that 30% is a good number. I'm not keeping a range like a range on 30%. I'm not saying if it's over 30%. It's a bad thing, obviously, right? Because like we said, the higher the better, Right? There is one thing I do want to point out. But before that, I do want to show you guys how to calculate it on who don't come for this video, we're gonna look at a company called Understand Electric Company. This company is known for its dividends. A lot of dividend investors like this company, and I'm just going to show you how to complete his company's return on shareholder's equity ratio using the financial state. So let's do it for 2019. Now we're like to the because there are different pages I'd like to write every years net income on a separate piece of paper and the one of a balance sheet and then divided. You know, now that I have rendered rather than going to in company to balance that learning basically is saying that then income. If you go to this section, it tells you that that income of the company right, so right here's as 2.3 million for investing tricks in 2018. OK, so whatever 2.3 million we're gonna go on a balance sheet and find the shareholders or it's called Stockholders Equity in Yahoo. Surely there is equity for the 2019. So going to see here, it says stockholders has to be right here, right, this same thing as total. But you want to make sure it's total those 2.3 billion over two million for 19. So Emerson Electric's, as you can see, has a 190.28% return on shareholder's equity ratio. A great number to have write anything from 0.23 is a great number, and anything greater that is even better. Some companies are so consistently profitable that they don't retain any of the earnings, and they just pay the stockholders immediately, which means they have they. They would have a negative number in stock overs equity ratio. This is very I've been saying very common, because it has to be insanely profitable to be for a company to be able to do this. But if and when this when that happens, if their net income is steadily increasing, so it's a per positive number, but their shoulders agrees and neck November that is a company with great durable advantages, right, because they're making more money and consistently payout their stockholders. That's a great company for the investor. But the thing after referees, if it has a negative number on stockholders equity ratio and on top of that has a negative income as their incomes are steadily decreasing or they're going into them, that is a terrible company to message because not only are they were not able to make profitable money, but they're also paying stockholders now if it's too low, like some companies have, like two less than 10% that something one avoid. So I would say a good rule of thumb is greater than 20%. But always remember higher the better, right? So it's not like if it's over 30% it's a bad thing. And remember, always trip the sign. So if it's negative or positive of this awful deed ratio, if the stockholder ratio is stockholders, equity is negative along with net income. That's something one avoid. But if neck uncovered is consistent, increasing and positive. But the stuff commiseration stockholders equity is negative. That's a great company you want invested, so and as I always say, you have to do your own research just cause it's 28%. Just don't buy the stuff immediately. You know, research. How is Emerson Electric Company doing these kind of numbers? How are they pulling? 0.28%. Right? And if the research sounds good and it makes sense that something what invested? 9. Capital Expenditure: Expansion is Awesome: So finally, we've been talking about income statements and balance sheets, but we haven't talked capital. Every company uses money on properties, land plants, any any kind of type of property. And they have to spend money on is called capital expenditure. And this could even included vehicles. So, like a delivering company, spends money on trucks and by the new truck that's so considered a capital expenditure and even even patents. Because patterns are considered properties kind of money are expenditure that you spend on dealing with patents. Organizing pence is considered capital expenditure. So obviously every company good both good and bad, spent a lot of money. Capital expenditure, because the end goal of company is to make more money right on, become bigger and bigger. And in order to do that, it needs to spend money on capital. Take Coca Cola, Coca Cola, for example. If Coca Cola only had one factory in Atlanta, they wouldn't. Girl is much right. It would be able to scale to the entire world the entire world like it has today. So Coca Cola has to spend capital expenditures on buying more land, buy more land for factories building factories. But they're on the other hand, there are also bad companies who use Catholics, vendors to ridiculous amounts That makes the company not be able to make any kind of profit . So that's what we're looking out for today. The calculation that we're looking for is basically capital expenditure over net earnings. Before I talk about the percentages and what percentage is supposed to look for, I'm gonna go through it on finance. So over this video, I'm just gonna look at Apple again because it's just so good example, it just comes off my head. Well, we're in the financials statement. Sometimes when you will be financed. It has this long sheet of income statement and you can't really find the net income immediately. Sometimes when you load it first, it says that income bold it. You can just use that. But if you can't find it like this, you just go to that and come for common stockholders and just look at that and come here right. This is also a representation. We're gonna go to net income off the company first before you go to cash. Well, before you go to cash flow here, you're gonna go income statement and look at the net income first and for 2019. For Apple, it was around 55 million. Now the reason why we need to look at every year is because good capital expenditures spend extended true, a good extended shirt. If it only happens once a year, that means it doesn't have the advantage. If it's spending a lot of one small in one year and a lot the next year, that means it doesn't have an advantage. But if it has the consistent performance of good good cat looks miniature, it means there is an advantage in that company that makes it durable. That makes it competitive. That makes it advantageous compared to its competitors. What you would do is you would write on a piece of paper 2019 night income 55 18 2059 to 17 48 and then what you do is you go to cash flow and the look at capital expenditure for that corresponding year. So for Apple and the way the fact capital expenditure is, just go to free cash flow at the bottom and then just open it and you'll see capital expenditure So for Apple, they start around 10.5 million on capital expenditure. Whether that be a new Apple store, new factories, right? You manufacturing's, you know, places you don't know. But they spend around template friendly, and now we're gonna do get the temple. And like that, by 50 she's in that. Include, You can see Apple uses around 0.19 which thrown 19% off their net income and capital expenditure looks adjust anything under 50%. It's a good number. Is a great company that has a durable vantage. And if it's under 25% even better. Clearly Apple passes both tests. It's actually under 25% now. Am I done here? Um, I like OK, great. Apple has that trait. Awesome. She passes this test. Enjoy final stop. No, the most important thing here is you need to check other years. It's 2018 the same, still on 17% for 2018. It was, I forgot, very exact. In company, I think, was like 59. No, that's so once again under 50% right? And that means they're able to grow without having to buy so much liable to having to buy so much property company with a durable advantage always goes towards spending less capital expense. So that's something you always want to check when you're looking at a castle statement of a company.