Step 2 of 8

Financial Health & Survival

Is step mein hum check karte hain — kya company financially survive kar sakti hai? Bahut si companies sales dikhaati hain lekin karz (debt) ke bojh tale dabi hoti hain. Debt-to-Equity, Interest Coverage aur Liquidity ratios se hum default aur bankruptcy risk ko eliminate karte hain.

~2,000 Stocks Step 1 ke baad
~800 Survive Debt filter ke baad
Zero Bankruptcy Safe companies only
Retail Investor ki sabse badi galti: Sirf profit dekhkar stock kharid lena, aur ye na dekhna ki company ke upar kitna loan hai! Ek bura quarter aane par heavy debt wali company interest nahi chuka paati aur bankruptcy ki taraf chali jaati hai.
Debt-to-Equity Ratio (D/E)
Leverage Filter · Critical Safety Check
Step 2.1
1. Ye kya hai? (What is it?)

Simple bhasha mein: Company ke paas apne khud ke ₹100 ke muqable kitne rupaye ka karz (loan) hai?

Formula: Debt to Equity = Total Debt ÷ Shareholders' Equity

• D/E = 0: Zero Debt (Debt-Free company) — Sabse safe!
• D/E = 0.5: Har ₹100 ki equity par sirf ₹50 ka loan — Bahut comfortable.
• D/E = 2.0: Har ₹100 ki equity par ₹200 ka loan — Risky!
• D/E > 3.0: Danger Zone — Ek recession ya interest rate hike company ko duba sakta hai.

Note: Banks aur NBFCs ke business model mein hi borrowing hoti hai, isliye D/E filter banking stocks par mat lagayein.

2. Asli Indian Example

Vodafone Idea vs Infosys / TCS:
Vodafone Idea ke upar ₹2 Lakh Crore se zyada ka karz tha. Chahe unka revenue hazaaron crore ho, poora profit interest chukane mein chala gaya aur stock ₹300 se girkar single digit ban gaya.

Doosri taraf, Infosys, TCS, Asian Paints practically Debt-Free companies hain. Inka saara profit shareholders ka hai — koi lender unhe pareshan nahi kar sakta.

3. Screener mein kaise dekhein?
Screener.in Query:
Debt to equity < 1 AND Market Capitalization > 500
4. Ideal Range
D/E = 0: Debt-Free (Gold Standard) D/E < 0.5: Ultra Safe D/E 0.5 – 1.0: Acceptable for Capital Intensive D/E > 2.0: High Distress Risk — Avoid
Interest Coverage Ratio (ICR)
Solvency Gate · Debt Servicing Power
Step 2.2
1. Ye kya hai? (What is it?)

Ye ratio batata hai — company apne saalane interest payments ko apni operating profit (EBIT) se kitni baar pay kar sakti hai?

Formula: Interest Coverage Ratio = Operating Profit (EBIT) ÷ Annual Interest Expense

• ICR = 10x: Company apne interest expense se 10 guna zyada kama rahi hai — koi chinta nahi.
• ICR = 1.0x: Operating profit poora ka poora interest mein chala gaya — Net profit zero!
• ICR < 1.0x: Company apna byaaj (interest) bhi nahi chuka pa rahi — Default risk!

2. Asli Indian Example

DHFL / Reliance Capital (Past Defaults): Jab real estate aur lending slow hui, inka ICR 1x se neeche chala gaya. Company NCD holders ko interest nahi de payi aur NCLT insolvency mein chali gayi.

Asian Paints / Pidilite: Inka ICR 50x se 100x+ hota hai! Matlab inka debt itna kam aur profit itna robust hai ki interest ki koi chinta hi nahi.

3. Screener mein kaise dekhein?
Screener.in Query:
Interest Coverage Ratio > 3 AND Debt to equity < 1
4. Ideal Range
ICR > 10x: Stress-Free Coverage ICR 5x – 10x: Healthy ICR 3x – 5x: Minimum Acceptable ICR < 1.5x: High Default Risk — Red Flag
Current Ratio & Quick Ratio
Working Capital Liquidity Check
Step 2.3
1. Ye kya hai? (What is it?)

Current Ratio = Current Assets ÷ Current Liabilities
Ye dekhta hai ki agle 12 mahine mein aane wale saare bills aur obligations chukane ke liye company ke paas enough short-term assets (cash, debtors, inventory) hain ya nahi?

• Current Ratio > 1.5x: Healthy liquidity buffer.
• Current Ratio < 1.0x: Short-term liquidity crunch — company ko daily operations ke liye emergency loan lena pad sakta hai.

4. Ideal Range
Current Ratio 1.5x – 3.0x: Optimal Buffer Current Ratio 1.0x – 1.5x: Adequate Current Ratio < 1.0x: Working Capital Stress
Step 2 Combined Screener Query
Screener.in — Step 2 Financial Health Master Query
Market Capitalization > 500 AND Debt to equity < 1 AND Interest Coverage Ratio > 3 AND Current ratio > 1.3 AND Average volume 3months > 100000