I looked back at the Quality Stockrank for BT in April and July of 2016, ahead of the worst of the share price falls subsequently. The ranks were 75 in both cases - you'd hope indicative of a low risk.

I just wonder what the formula is for calculating 'Quality'? On one hand you'd expect a component based on ROCE or RoE or net margin, but balanced by something reflecting debt or gearing.

Is there any weighting for indebtedness in the Quality Rank computation i.e the Altman Z score? If there is, perhaps the weighting of this is insufficient?

Can ANY company be considered to possess a high investment "Quality" ranking (in a general sense) it has excessive debt? Regardless of it's ROCE etc. After all, sooner or later any company can face a mishap, a bump in the road. Whatever the underlying attractions of a businesss, it needs to keep low enough gearing that it can shrug off a mishap. Otherwise it can hardly be counted as a high Quality investment.



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