“TSSW”   worksheet rather than the SSG.
The benefits of that form are:

It displays all of the data
It uses 10 years of annual data for PE analysis. The SSG uses 5.
It has all of the Quality stuff on the front and the Value stuff on the back

It uses 4 quarters and the trailing 12 months of quarterly data for recent activity—a kind of “mini-PERT.”. The SSG uses only 1. (IMO, a major benefit.)
It displays and uses the “Business Model” (same as Preferred Procedure)
It plots profit margins, ROE, and PEs in graphic form.

It uses the Historical Value Ratio (HVR) – the RV using 10 years of data instead of only 5.
It uses the Risk Index instead of the U/D.

It calculates Total Return and Average Return using less than the full
five-year period (as did Toolkit 4). This is somewhat less conservative than the NAIC version which uses 5 years as does Toolkit 5.

It provides the calculation of the “buy price,” the highest price at which you can realize a TR of 14.9% and a risk index of 25% (U/D of 3 to 1).

Here is Ellis’ explanation of differences between Risk Index and U/D ratio.


”The risk index is very similar to the Upside/Downside Ratio but with some benefits that make it more intuitive.


As you know, the U/D ratio is calculated by dividing the difference between the
forecast high price and the current price by the difference between the current price and the
forecast low price. We, of course, are looking for a 3:1 ratio.


The Risk Index is calculated by dividing the difference between the current
price and the forecast low price by the difference between the forecast HIGH price and the forecast low price. We look for a value of .25 or 25% here.


A 25% risk index is the same as the 3:1 U/D ratio since 25% represents risk and
therefore 75% must represent reward. In fact, you can convert one to the other quite
readily as follows:

RI = 1 / (U/D + 1)

U/D = (1 / RI) -1


The advantage of the Risk Index is that, as the current price declines and
approaches the forecast low price, it declines linearly whereas the U/D grows asymptotically

as the current price approaches the low, becoming infinity when they are equal.

This is very unwieldy and produces an U/D ratio that is in a reasonable range only

within a very small window. This is one of the reasons so many folks think it’s necessary to lower the low price estimate when the U/D goes into double digits.


To make this as simple as
possible: we are examining the risk. To do so, we analyze the current price
relative to the range between the high and low prices. We do this in both
cases; i.e., the U/D ratio and the Risk Index. It’s certainly a more intuitive
measure if you can say that 25% of the “deal” is risk. If the price should go
down one percent of that distance, it would be 24% risk. If it went down
another 1%, it would show a 23% risk. If it then went down another 10%, it
would be 13% risk, and so on, until there is virtually no risk when they are the same.


(Realistically, we know of course that there is an element of risk in any investment; but this is not what this metric should tell us.)


For the same decline in percentage, if you started with a 3:1 U/D ratio and the
price declined the same amount as in the previous paragraph, the U/D ratio would go to

3.16:1. However, another decline in the same amount would make the U/D ratio
3.35:1. And the next 10% would put the U/D at 6.7:1. The increase in the U/D is different

even though the decline is a constant dollar amount or percentage of the high
to low range. This is because every increase in the numerator of the equation causes a reduction

in the denominator. By not holding the denominator constant, the changes become radical and unwieldy.


It seems simple just to think of the risk as a linear percent of the range—the risk is 10%--rather than to try to grasp the variations in the U/D ratio.”

Ellis Traub