Looking for truly good companies? Why not use Buffett's methodology to filter them? This system may seem simple, but it actually captures the core of a company's quality.

First, examine the stability of growth. Has profit been consistently increasing over the past 10 years? This is crucial. A decline is acceptable once, but the drop must be within 45%; otherwise, it indicates insufficient risk resistance.

Next is debt management capability. How does long-term debt compare to earnings? If long-term debt exceeds earnings by more than 5 times, it's playing with fire. Healthy companies should have manageable debt levels and sufficient safety margins.

Then, look at Return on Equity (ROE), which measures how efficiently a company uses shareholders' funds to generate profit. If ROE doesn't reach 15%, it indicates average capital utilization efficiency. Also, consider the return on capital already employed; 12% is a passing line.

Finally, cash flow. Free cash flow must be positive and sufficient to cover the company's capital expenditures. Without real cash flow, even impressive profits are just paper wealth.

Combining these five dimensions can help you quickly filter out many "pseudo-quality" companies and identify truly promising targets.