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.
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Financial statements
16 pages carry this tag.
Analysis
Concept Guides
Concept Guide
Reading an income statement
How to read a P&L under Ind AS, line by line from revenue to PAT, including EBITDA, other income and exceptional items.
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Concept Guide
Reading a balance sheet
What a company owns, owes and leaves for shareholders: the Ind AS balance sheet layout, the key metrics, goodwill and contingent liabilities.
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Concept Guide
Reading a cash flow statement
Why cash is harder to fake than profit: the three sections of the cash flow statement, free cash flow, and checks on operating cash quality.
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Concept Guide
Linking the three statements
How the P&L, balance sheet and cash flow statement feed into each other, and how to build a three-statement model that balances.
10 min readRead more
Concept Guide
Ind AS vs IFRS vs Indian GAAP
Who follows Ind AS, IFRS or old Indian GAAP, the key differences and carve-outs, and how to compare a company's numbers across the switch.
7 min readRead more
Concept Guide
Common adjustments (leases, ESOPs, one-offs)
The adjustments analysts make to reported numbers: exceptional items, ESOP costs, leases, forex and one-off write-offs, and the adjusted EBITDA trap.
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Concept Guide
Quality of earnings
How to tell whether profit is backed by cash: CFO to PAT, accruals, receivables and DSO trends, the Beneish M-score, and earnings management in India.
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Courses
Course
Fundamental analysis: the complete course
The original fundamental analysis course: approaches, qualitative factors, the three statements, ratio categories, sector checks, red flags, and valuation models.
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Interactive Lessons
Lesson
Read an income statement, line by line
Walk through a real Indian company's P&L, line by line, and understand what each number means.
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Lesson
Compute ratios from raw statements
Pull numbers from financial statements and compute the ratios analysts use every day, you do the math, we check it.
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Glossary
Glossary
Market cap
The total market value of a company's shares: the share price multiplied by the number of shares in issue. It is what the market is paying today for the whole of the company's equity.
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Glossary
Book value
The net asset value of a company divided by outstanding shares. Represents theoretical value if company was liquidated.
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Glossary
Free float
The part of a company's shares that is available for trading in the market. It leaves out shares held by promoters and by other holders unlikely to sell, such as strategic investors, and shares that are locked in.
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Glossary
Face value
The nominal value of a share as stated in the company's charter. Used for accounting purposes and calculating dividends.
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Glossary
Cash flow from operations
The cash a company actually received from its core business of selling goods and services during the year, after paying its operating costs. It excludes investing and financing flows.
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Related topics: Valuation, DCF, Relative valuation, Cost of capital, Cash flow, Earnings quality, Red flags, Ratios