Hey Lykkers! Ever looked at a stock chart and felt completely lost in all the numbers and percentages? You're not alone. The financial world throws percentages at us from every direction, but which ones actually matter?

Let me tell you a quick story about my friend Alex. He bought a stock because it was "up 5%," only to discover later that the company's debt had grown by 20% that same quarter.

He learned the hard way that not all percentages are created equal. Today, I'll share the five percentage-based metrics that truly separate successful investors from the crowd.

1. Return on Equity (ROE): The Management Report Card

Think of ROE as your management team's final exam score. It measures how efficiently a company is using your investment to generate profits. The formula is simple: Net Income ÷ Shareholder's Equity.

Why it matters: A consistently high ROE (typically above 15%) suggests you're investing in a well-oiled machine. As investing legend Warren Buffett emphasizes: "The primary test of managerial economic performance is the achievement of a high earnings rate on equity capital employed."

Watch out for red flags: if debt is driving ROE rather than genuine profitability, you might be looking at a house of cards.

2. Earnings Per Share (EPS) Growth: The Engine of Value

EPS Growth tells you how fast a company's profits are growing per share you own. It's the engine that ultimately drives stock prices higher over time.

Why it matters: Look for consistent EPS growth that outpaces inflation. A company growing EPS at 15% annually is fundamentally different from one growing at 3%.

3. Free Cash Flow Yield: The Truth Teller

This metric compares a company's free cash flow to its market value. It's what I call the "truth teller" because cash is much harder to manipulate than earnings.

Why it matters: A high FCF yield suggests you're getting good value for your money.

4. Debt-to-Equity Ratio: The Stability Gauge

This percentage shows you how much debt a company uses compared to its equity. It's crucial for understanding how well a company can weather economic storms.

Why it matters: The ideal ratio varies by industry, but generally, you want to see stability rather than sudden spikes.

5. Gross Margin: The Competitive Moat

Gross Margin reveals how much profit a company makes after accounting for the direct costs of its goods or services. It's a powerful indicator of competitive advantage.

Why it matters: Expanding gross margins often mean a company has pricing power or cost advantages. Look for stability or gradual improvement.

Putting It All Together

Remember Lykkers, no single metric tells the whole story. The magic happens when you see positive trends across multiple percentages. A company with growing ROE, expanding margins, healthy EPS growth, reasonable debt, and strong cash flow? That's the holy grail.

Start tracking these five percentages in your investment research. They'll help you cut through the noise and focus on what truly drives long-term investment success. As you practice, you'll develop what Charlie Munger calls "a latticework of mental models" that will serve you well throughout your investing journey.

Happy investing, and may your percentages always trend in the right direction!