Why it works this way
A generic checklist treats a 40% margin the same whether you're modeling a software company (unremarkable) or a grocery retailer (extraordinary, and worth real scrutiny). An equity analyst doesn't ask every question every time — they size up the industry first, then interrogate whichever numbers look unusual for it. This tool encodes that judgment: each question above is tied to a trigger condition, adjusted per industry, so a 45% growth assumption in AI infrastructure raises different flags than the same number in retail.
The underlying research is the same as before: revenue growth reverts to average far faster than returns on capital do (a McKinsey finding on US firms), excess returns fade faster at smaller firms and at firms with higher reinvestment rates, and growth justified purely by reinvestment rate × ROIC rarely holds at the terminal-value stage without a specific reason. The sanity-check panel above runs that math directly against whatever growth number you entered.
Where this is honest about its limits
The industry thresholds here are general, judgment-based starting points for a conversation, not a precise sourced benchmark for every sub-sector — a 35% margin can be ordinary for one software category and remarkable for another. Treat a triggered question as a prompt to go find the real answer, not as a verdict. Run the numbers themselves through the Growth Rate Justification Calculator, the Implied Cost of Equity Calculator, and the WACC Calculator.