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Buffett's Final Check on a Stock: The Return on Investa Capital
Dollar General's gross profit margin has been consistent over the past 10 years as it has hovered around 31%. From 2020 until today, return on Investa Capital has been in the 10% to 13% range. Since 2013, the free cash flows have grown at a compounded annual growth rate of 13.8%. Buffett's final check is to determine the intrinsic value of the company and only make the purchase if the stock is trading below that value.