Income statement (Invest Lesson I1)
The story of one period, top to bottom: revenue → gross profit → operating income → net income. The margins are those lines as percentages of revenue. EPS divides the income available to common shareholders — net income less any preferred dividends — by the weighted-average share count; the diluted count, which also counts the shares that convertible claims, options and similar awards would add, is the conservative denominator. One period’s margins prove nothing about pricing power or management quality — the comparison that carries weight runs across several reported periods.
Balance sheet and cash flow (Invest Lesson I2)
| Measure | The course’s definition |
|---|---|
| The identity | Assets = liabilities + equity — a photograph at the period’s last day |
| Net debt | Interest-bearing debt, short-term and long-term, minus cash and cash equivalents (a negative result is net cash) |
| Enterprise value (EV) | Market cap plus net debt (or minus net cash) — the whole-business price an acquirer effectively pays |
| Free cash flow (FCF) | Operating cash flow minus capital expenditure |
| Cash conversion | FCF ÷ net income, read over several years; mature, steady businesses often run at or above one — a diagnostic in context, not a verdict |
| EV/EBITDA | Enterprise value divided by EBITDA — whole-business price over a whole-business earnings measure. EBITDA is stated before interest because it belongs to lenders and owners together. Written the other way up, it is a different measure — a rough earnings yield — not the multiple. |
Warning sign ≠ proof. A flag on these pages — receivables swelling faster than revenue is the lesson’s example — is a reason to dig, never by itself proof of misconduct.
Keep the set
The other reference sheets: Order types · Instrument comparison · Risk arithmetic · Reading an edition. All five hang off the Education hub.
Summarizes Invest-track Lessons I1–I2, as reviewed October 24, 2026.