netnet-worksheet

name	netnet-worksheet
description	Perform net-net / deep value analysis on a specific stock using a structured Investment Appraisal worksheet. Use this when evaluating a company's margin of safety, calculating net current asset value (NCAV), or running a structured balance-sheet-driven valuation on a potential investment.

Worksheet style adapted from Peter Cundill's investment appraisal form.

Qualifying Criteria

Meet most before proceeding:

• Price < book value (ideally < net working capital less long-term debt)
• Price < half of 52-week high, preferably near all-time low
• P/FCF < 10 or < inverse of long bond rate (whichever is lower)
• FCF positive; preferably rising over 5 years
• Pays dividends or buys back stock; preferably with history of increases
• Debt is moderate; room to expand borrowing if needed

Worksheet

Five years of data across seven sections.

1. Company Header

Field	Entry
Analyst	Who prepared this
Source	How the idea surfaced
Company	Legal name
Ticker	Identifier
Business	One-line description
Currency	Reporting currency
Current Price	Latest share price
Market Cap	Current capitalisation
Shares Out	Count; note dual-class / registered structures
Major Holders	Who controls, what %
Year End	Fiscal year-end
EPS (5yr)	Each year

2. Profit & Loss (in reporting currency)

Line	5yr
Revenue
Income before exceptional items
Net income
EPS (normalised)
EPS (reported)
Dividend per share
Price range (high / low)	each year

3. Balance Sheet & NNWC

Net Net Working Capital formula:

NNWC = Cash & Securities
     + Other Current Assets (discounted)
     - Current Liabilities
     - Long-Term Debt
     - Pension & Other Obligations
     + Equity Investments (at cost)
     + Other Investments (at cost)

Line	5yr
Cash & securities
Other current assets
Current liabilities
= Working Capital
Less: Long-term debt
Less: Pension / other liabilities
Add: Equity investments (cost)
Add: Other investments
= NNWC
NNWC per share	NNWC ÷ shares out

4. Fixed Assets & Equity

Line	5yr
Net fixed assets
Intangible assets (incl. deferred charges)
Other assets
Less: Deferred tax
Less: Minority interest
Less: Provisions
= Shareholders' Equity
Book value per share

5. Cash Flow

Line	5yr
Net profit
Depreciation & amortisation
Other non-cash items
= Gross cash flow
CAPEX
= Free cash flow
FCF per share

6. Ratios & Other Data

Metric	Formula
Debt / Equity	Total liabilities ÷ equity
FCF Yield	FCF per share ÷ price
P/FCF	Price ÷ FCF per share
Return on Equity	Net income ÷ equity
Return on Price Paid	FCF ÷ (shares × entry price)
Dividend Yield	Dividend ÷ price
Employees	Headcount
Shareholders	Count

7. Supplemental

• Insurance value — Market vs. carrying cost
• Pension funded status — Assets vs. benefit obligations
• NOL — Tax loss carryforwards (total and per share)
• Days inventory / receivables — Efficiency
• Voting restrictions — Limits on transfer or voting
• Dividend restrictions — Constraints on payouts

Margin of Safety

All must hold:

1. Price < NNWC per share
2. Conservative adjustments hold — re-run NNWC with extra haircuts on receivables and inventory
3. Positive FCF — or trending toward it; cash burn erodes margin
4. Hidden assets — real estate at cost, brands, investment portfolios, subsidiaries
5. Plausible catalysts — buyback, activist, spin-off, sector recovery, management change

Gotchas

• Chinese VIE structures: Listed entity may be a shell — operating company is separate via contractual arrangements. Ownership and liquidation value are not what the balance sheet suggests. Check the VIE agreement terms.
• Korean circular shareholding: Chaebol cross-holdings inflate book value. Unwind circular stakes to find real equity.
• Japanese cross-shareholdings (JGAAP): Equity stakes in affiliates carried at cost, often at huge discounts to market. Check footnotes for hidden assets.
• US GAAP LIFO: LIFO inventory accounting understates book value. Add back LIFO reserve to get true NWC.
• Australian franking credits: Tax credits attached to dividends are refundable by the ATO. They survive liquidation as a receivable. Add discounted NPV to NNWC for Australian stocks.
• Brazilian JCP: Interest on equity is tax-deductible, treated as an expense. Net income is understated vs. dividend-only peers. Add back JCP to normalise earnings quality.
• Off-balance sheet liabilities: Operating leases, pension shortfalls, environmental liabilities. Adjust NNWC.
• Cash burn erodes NNWC: A net-net that loses cash will see its margin of safety shrink over time. FCF must turn positive or the thesis breaks.