How a listing is analysed

1. 1The company reports its figures: the round it is raising, two to four years of income statements, its latest balance sheet and cash flow, and answers to twelve governance questions.
2. 2The engine computes every ratio, score, risk and estimate from those figures and the reference parameters in use.
3. 3Musharik's staff review the submission beside the company's documents, with every automatic check listed, then publish it or send it back. A later change to the figures goes through review again, and the live listing stays as it was until the change is approved.

• Gross profit = revenue − cost of sales
• EBITDA = operating profit + depreciation and amortisation
• Net debt = interest-bearing debt − cash
• Invested capital = owners' equity + interest-bearing debt − cash
• Free cash flow = operating cash flow + investing cash flow
• Closing cash = opening cash + operating + investing + financing cash flow
• Revenue CAGR = (last year's revenue ÷ first year's) ^ (1 ÷ years between them) − 1
• Growth after inflation = (1 + growth) ÷ (1 + inflation) − 1

Growth is measured across full fiscal years. A trailing-twelve-month period overlaps the last fiscal year, so it is compared with that year, setting the months since against the same months a year earlier, but never turned into an annual rate. A ratio with nothing to divide by, such as a margin on no revenue, is shown as unavailable rather than as zero.

Each score runs from 0 to 5 and is read off a published table of anchor points. Between two anchors the score moves in a straight line; below the first anchor it takes the first score, and above the last it takes the last. Scores are rounded to one decimal.

A score whose input cannot be computed (a margin with no revenue, a valuation with no sector multiples) is left out rather than counted as zero, and the weights of the scores that remain are scaled up to fill its place.

Each risk is a fact about the figures with a fixed severity. A risk that applies is listed on the listing with the number that raised it.

The round sets a price. Post-money value = amount raised ÷ equity offered. Pre-money value = post-money value − amount raised. Enterprise value = pre-money value + net debt.

Comparable companies: revenue × the sector's EV / revenue, averaged with EBITDA × the sector's EV / EBITDA when EBITDA is positive. Net debt is taken off and the amount raised added, so the estimate is a post-money value like the round's.

Discounted cash flow, only when free cash flow is positive: 5 years of free cash flow, growing in the first year at the company's revenue CAGR (capped at 40%) and slowing in a straight line to the long-run growth rate by the last, discounted at the parameter set's discount rate, plus a terminal value that grows at the long-run rate from then on.

When both apply they are weighted 60% comparable companies and 40% discounted cash flow; when only one applies, it carries the whole weight. The blended value is shown against the post-money value the round implies.

Precedent transactions are not used. There is no reliable source of what Egyptian private companies have sold for, and a made-up multiple is exactly what this method exists to avoid.

A listing is compared with other published Musharik listings in the same sector on their latest revenue growth, EBITDA margin, net margin and return on equity. They are labelled Peer 1, Peer 2 and so on. The comparison appears only once there are at least 3; until then the listing says there are not yet enough comparable companies. Every figure in it is already public, anonymously, on the peer's own listing.

Twelve yes / no / not-applicable questions, four for each pillar. A pillar's score is the share of its applicable answers that are yes, out of 100; a question that does not apply counts for neither side. The answers are the company's own and are shown as self-declared.

The company has to fix these before it can submit:

• The fiscal years follow on from one another, each once, oldest first
• A trailing-twelve-month period ends after the last fiscal year and before the next
• The company was founded by its first reported year
• Revenue, cost of sales, depreciation, assets, liabilities and opening cash are not negative
• The balance sheet balances, to within EGP 1,000 or 0.5% of total assets, whichever is larger
• The use of funds adds up to 100%
• The equity offered is between 1% and 100%
• The amount being raised is above zero
• Every governance question is answered
• The summary, 3 to 5 highlights and each team role are written in at least one language

These go to Musharik's reviewer, who checks them against the documents. They do not stop a submission:

• Closing cash in the cash flow statement matches cash on the balance sheet
• Net profit is no more than 25% above operating profit; more means sizeable income from outside the business
• The story names neither the company nor its contact, and has no email address, phone number or web address
• No figure moved by more than 50% since the last approved version

Inflation, the discount rate, long-run growth and each sector's multiples come from a parameter set that Musharik's staff publish, every value with its source and the date it was true on. A new set never changes a listing already published; staff recompute a listing deliberately.

No parameter set has been published yet, so listings show no growth score, no valuation score and no comparable-company or discounted-cash-flow estimate. Everything else is computed as normal.

• The figures are the company's own. Musharik checks them against the documents submitted; it does not audit them.
• Governance answers are self-declared.
• The margin tables are the same for every sector, although what counts as a healthy margin differs between them.
• A score describes the figures behind it. It is not a forecast and not a recommendation to invest.