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The 94 companies in this book have been placed as much as possible into a common format, for ease of comparison. Please study the following explanations in order to get as much as possible from the large amount of data.

The tables have been made as concise as possible, though they repay careful study, as they contain large amounts of information.

Note that the tables for the banks have been arranged a little differently from the others. Details of these are given later in this Introduction.

Head

At the head of each entry is the company name, with its three-letter ASX code and the website address.

Share-price chart

Under the company name is a five-year share-price chart, to September 2015, provided by Alan Hull (www.alanhull.com), author of Invest My Way, Trade My Way and Active Investing.

Small table

Under the share-price chart is a small table with the following data.

Share price

This is the closing price on 1 September 2015. Also included are the 12-month high and low prices, as of the same date.

Market capitalisation

This is the size of the company, as determined by the stock market. It is the share price (again, as of 1 September 2015) multiplied by the number of shares in issue. All companies in this book must be in the All Ordinaries Index, which comprises Australia's 500 largest stocks, as measured by market capitalisation.

Price-to-NTA-per-share ratio

The NTA-per-share figure expresses the worth of a company's net tangible assets – that is, its assets minus its liabilities and intangible assets – for each share of the company. The price-to-NTA-per-share ratio relates this figure to the share price.

A ratio of one means that the company is valued exactly according to the value of its assets. A ratio below one suggests that the shares are a bargain, though usually there is a good reason for this. Profits are more important than assets.

Some companies in this book have a negative NTA-per-share figure – as a result of having intangible assets valued at more than their remaining net assets – and a price-to-NTA-per-share ratio cannot be calculated.

See Table M, in the second part of this book, for a little more detail on this ratio.

Five-year share price return

This is the total return you could have received from the stock in the five years to 1 September 2015. It includes reinvested dividends, bonus stock, rights issues and capital gain from the stock's appreciation. It is expressed as a compounded annual rate of return.

Dividend reinvestment plan

A dividend reinvestment plan (DRP) allows shareholders to receive additional shares in their company in place of the dividend. Usually – though not always – these shares are provided at a small discount to the prevailing price, which can make them quite attractive. And of course no broking fees apply.

Around a third of all large companies seem to offer such plans. However, they come and go. When a company needs finance it may introduce a DRP. When its financing requirements become less pressing it may withdraw it. Some companies that have a DRP in place may decide to deactivate it for a short time.

The information in this book is based on up-to-date information from the companies. But if you are investing in a particular company in expectations of a DRP, be sure to check that it is still on offer. The company's own website will often provide this information.

Price/earnings ratio

The price/earnings ratio (PER) is one of the most popular measures of whether a share is cheap or expensive. It is calculated by dividing the share price – in this case the closing price for 1 September 2015 – by the earnings per share figure. Obviously the share price is continually changing, so the PER figures in this book are for guidance only. Many newspapers publish the latest PER for every stock each morning.

Dividend yield

This is the latest full-year dividend expressed as a percentage of the share price. Like the price/earnings ratio, it changes as the share price moves. It is a useful figure, especially for investors who are buying shares for income, as it allows you to compare this income with alternative investments, such as a bank term deposit or a rental property.

Sector comparisons

It is sometimes useful to compare a company's price/earnings ratio and its dividend yield with those of its sector.

Figures used in this book are those of the S&P/ASX sectors from September 2015.

Company commentary

Each commentary begins with a brief introduction to the company and its activities. Then follow the highlights of its latest business results. For the majority of the companies these are their June 2015 results, which were issued during July and August 2015. Finally, there is a section on the outlook for the company.

Main table

Here is what you can find in the main table.

Revenues

These are the company's revenues from its business activities, generally the sale of products or services. However, it does not usually include additional income from such sources as investments, bank interest or the sale of assets. If the information is available, the revenues figure has been broken down into the major product areas.

Earnings before interest and taxation

Earnings before interest and taxation (EBIT) is the firm's profit from its operations before the payment of interest and tax. This figure is often used by analysts examining a company. The reason is that some companies have borrowed extensively to finance their activities, while others have opted for alternative means. By expressing profits before interest payments it is possible to compare more precisely the performance of these companies. The net interest figure – interest payments minus interest receipts – has been used for this calculation.

EBIT margin

This is the company's EBIT expressed as a percentage of its revenues. It is a gauge of a company's efficiency. A high EBIT margin suggests that a company is achieving success in keeping its costs low.

Gross margin

The gross margin is the company's gross profit as a percentage of its sales. The gross profit is the amount left over after deducting from a company's sales figure its cost of sales: that is, its manufacturing costs or, for a retailer, the cost of purchasing the goods it sells. The cost of goods sold figure does not usually include marketing or administration costs.

As there are different ways of calculating the cost of goods sold figure, this ratio is best used for year-to-year comparisons of a single company's efficiency, rather than in comparing one company with another.

Many companies do not present a cost of goods sold figure, so a gross margin ratio is not given for every stock in this book.

The revenues for some companies include a mix of sales and services. Where a breakdown is possible, the gross profit figure will relate to sales only.

Profit before tax/profit after tax

The profit before tax figure is simply the EBIT figure minus net interest payments. The profit after tax figure is, of course, the company's profit after the payment of tax, and also after the deduction of minority interests. Minority interests are that part of a company's profit that is claimed by outside interests, usually the other shareholders in a subsidiary that is not fully owned by the company. Many companies do not have any minority interests, and for those that do it is generally a tiny figure.

As much as possible, I have adjusted the profit figures to exclude non-recurring profits and losses, which are often referred to as significant items. It is for this reason that the profit figures in Top Stocks sometimes differ from those in the financial media or on financial websites, where profit figures normally include significant items.

Significant items are those that have an abnormal impact on profits, even though they happen in the normal course of the company's operations. Examples are the profit from the sale of a business, or losses from a business restructuring, the write-down of property, an inventory write-down, a bad-debt loss or a write-off for research and development expenditure.

Significant items are controversial. It is often a matter of subjective judgement as to what is included and what excluded. After analysing the accounts of hundreds of companies, while writing the various editions of this book, it is clear that different companies use varying interpretations of what is significant.

Further, when they do report a significant item there is no consistency as to whether they use pre-tax figures or after-tax figures. Some report both, making it easy to adjust the profit figures in the tables in this book. But difficulties arise when only one figure – generally pre-tax – is given for significant items.

In normal circumstances most companies do not report significant items. But investors should be aware of this issue. It sometimes causes consternation for readers of Top Stocks to find that a particular profit figure in this book is substantially different from that given by some other source. My publisher occasionally receives emails from readers enquiring why a profit figure in this book is so different from that reported elsewhere. In virtually all cases the reason is that I have stripped out a significant item.

Earnings per share

Earnings per share is the after-tax profit divided by the number of shares. Because the profit figure is for a 12-month period the number of shares used is a weighted average of those on issue during the year. This number is provided by the company in its annual report and its results announcements.

Cash flow per share

The cash flow per share ratio tells – in theory – how much actual cash the company has generated from its operations.

In fact, the ratio in this book is not exactly a true measure of cash flow. It is simply the company's depreciation and amortisation figures for the year added to the after-tax profit, and then divided by a weighted average of the number of shares. Depreciation and amortisation are expenses that do not actually utilise cash, so can be added back to after-tax profit to give a kind of indication of the company's cash flow.

By contrast, a true cash flow – including such items as newly raised capital and money received from the sale of assets – would require quite complex calculations based on the company's statement of cash flows.

However, many analysts use the ratio as I present it, because it is easy to calculate, and it is certainly a useful guide to how much funding the company has available from its operations.

Dividend

The dividend figure is the total for the year, interim and final. It does not include special dividends. The level of franking is also provided.

Net tangible assets per share

The NTA-per-share figure tells the theoretical value of the company – per share – if all assets were sold and then all liabilities paid. It is very much a theoretical figure, as there is no guarantee that corporate assets are really worth the price put on them in the balance sheet. Intangible assets such as goodwill, newspaper mastheads and patent rights are excluded because of the difficulty in putting a sales price on them, and also because they may in fact not have much value if separated from the company.

As already noted, some companies in this book have a negative NTA, due to the fact that their intangible assets are so great, and no figure can be listed for them.

Where a company's most recent financial results are the half-year figures, these are used to calculate this ratio.

Interest cover

The interest cover ratio indicates how many times a company could make its interest payments from its pre-tax profit. A rough rule of thumb says a ratio of at least three times is desirable. Below that and fast-rising interest rates could imperil profits. The ratio is derived by dividing the EBIT figure by net interest payments. Some fortunate companies have interest receipts that are higher than their interest payments, which turns the interest cover into a negative figure, and so it is not listed.

Return on equity

Return on equity is the after-tax profit expressed as a percentage of the shareholders' equity. In theory, it is the amount that the company's managers have made for you – the shareholder – on your money. The shareholders' equity figure used is an average for the year.

Debt-to-equity ratio

This ratio is one of the best-known measures of a company's debt levels. It is total borrowings minus the company's cash holdings, expressed as a percentage of the shareholders' equity. Some companies have no debt at all, or their cash position is greater than their level of debt, which results in a negative ratio, so no figure is listed for them.

Where a company's most recent financial results are the half-year figures, these are used to calculate this ratio.

Current ratio

The current ratio is simply the company's current assets divided by its current liabilities. Current assets are cash or assets that can, in theory, be converted quickly into cash. Current liabilities are normally those payable within a year. Thus, the current ratio measures the ability of a company to repay in a hurry its short-term debt, should the need arise. The surplus of current assets over current liabilities is referred to as the company's working capital.

Where a company's most recent financial results are the half-year figures, these are used to calculate this ratio.

Banks

The tables for the banks are somewhat different from those for most other companies. EBIT and debt-to-equity ratios have little relevance for them, as they have such high interest payments (to their customers). Other differences are examined below.

Operating income

Operating income is used instead of sales revenues. Operating income is the bank's net interest income – that is, its total interest income minus its interest expense – plus other income, such as bank fees, fund management fees and income from businesses such as corporate finance and insurance.

Net interest income

Banks borrow money – that is, they accept deposits from savers – and they lend it to businesses, homebuyers and other borrowers. They charge the borrowers more than they pay those who deposit money with them, and the difference is known as net interest income.

Operating expenses

These are all the costs of running the bank. Banks have high operating expenses, and one of the keys to profit growth is cutting these expenses. Add the provision for doubtful debts to operating expenses, then deduct the total from operating income, and you get the pre-tax profit.

Non-interest income to total income

Banks have traditionally made most of their income from savers and from lending out money. But they are also working to diversify into new fields, and this ratio is an indication of their success.

Cost-to-income ratio

As noted, the banks have high costs – numerous branches, expensive computer systems, many staff, and so on – and they are all striving to reduce these. The cost-to-income ratio expresses their expenses as a percentage of their operating income, and is one of the ratios most often used as a gauge of efficiency. The lower the ratio drops the better.

Return on assets

Banks have enormous assets, in sharp contrast to, say, a high-tech start-up whose main physical assets may be little more than a set of computers and other technological equipment. So the return on assets – the after-tax profit expressed as a percentage of the year's average total assets – is another measure of efficiency.