How it works (FF)

Finance Fundamentals

Finance Fundamentals is the technical half of investing. It teaches you to read a company’s financial statements the way an analyst at an investment bank or a private equity firm reads them, and to turn those numbers into a defensible view of what a business is actually worth.

You start with the three financial statements and how they lock together into one integrated view of the business: the income statement, which shows what the company earned; the balance sheet, which shows what it owns and owes; and the cash flow statement, which shows the real cash that moved. You’ll learn to separate accounting profit from actual cash, because a company can report a profit and still be consuming cash, and knowing the difference is where most beginners err.

From there you build the professional toolkit one piece at a time: normalising the statements so one-off items stop distorting the picture, telling enterprise value apart from equity value, reading valuation multiples for what they truly say, and finally building a DCF model from a blank page. By the end you can open any company’s filings and value it yourself, using the same methods that price billion-dollar deals.

1The Three Financial Statements
2Income Statement
3Balance Sheet
4Cash Flow and Free Cash Flow
5Adjustments and Normalization
6Enterprise Value vs Equity Value
7Valuation Multiples
8DCF Modeling
9LBO Modeling Basics
10M&A Deal Logic and Accretion / Dilution