Financial analysis
How to Value a Company Using a Discounted Cash Flow Model
A DCF is not a formula you feed numbers into. It is a story about a business, written in cash flows. This walk-through builds one step by step.
·5 min read
Financial analysis
Statements, ratios, cash flow, and valuation, with the traps inside them.
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Financial analysis
How to Read a Company Before Investing: A Financial-Statement Framework
Most people start with the share price and the P/E. A better order starts with the business, works through the statements, and looks at the price last.
·5 min read
Financial analysis
What credit ratings measure, and what they miss
A AAA rating is not a stamp of quality on a company. It is an opinion on one narrow question: will this debt be repaid on time? Knowing the limits of that question is what makes a rating useful.
·7 min read
Financial analysis
Revenue Growth vs. Free Cash Flow Growth: Which Matters More?
Revenue growth is the number that makes headlines. Free cash flow is the number that pays investors. The link between them is the return a company earns on what it reinvests.
·5 min read
Financial analysis
Terminal value dominates valuations, and why that should worry you
Analysts spend hours forecasting five years of cash flows, yet most of a DCF's answer usually comes from one number at the end. Here is why, and what to do about it.
·7 min read
Financial analysis
How Small Changes in WACC Affect a Company's Estimated Value
WACC looks like a precise input, but it is built from four estimates, each with a range. A one-point change can move a value by 10% to 25%, depending on when the company's cash arrives.
·5 min read
Financial analysis
Why a profitable company can still run out of cash
Profit is an accounting opinion; cash is a fact. This is how a company can be profitable on paper and still unable to pay its bills.
·7 min read
Financial analysis
Five red flags in financial statements
Accounting problems rarely show up as one dramatic number. They show up as small places where the statements stop agreeing with each other. Here are five to check first.
·7 min read
Financial analysis
Market Capitalisation vs. Enterprise Value: What Each Tells You
Market cap tells you what the shares cost. Enterprise value tells you what the whole business costs. Comparing companies on the wrong one can make an expensive company look cheap.
·5 min read
Financial analysis
What three years of a cash flow statement reveals that one year hides
Profit is an opinion, cash is a fact, and one year of cash flow is a snapshot. It takes three years for the snapshot to become a story.
·6 min read
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