Make the numbers
make sense.
Learn the mechanics. Test an assumption. Explain what changes.
The language of a business
Separate money, value, profit and cash. Make percentages work for you.
Open the first lessonProfit isn’t the whole picture.
Change the investment in equipment. Watch cash move while earnings stay put.
The earnings & cash bridge
Before you move a sliderCan cash fall while EBITDA stays fixed? Predict what increasing capex will do.
Equipment purchases affect investing cash now. Depreciation affects earnings across its useful life. EBITDA omits capital spending, working capital, interest and tax; it is not cash available to owners.
Model assumptions & units
All amounts are hypothetical $000. D&A is shown separately and counted once. Nonoperating income is assumed to be ordinary cash income included in CFO, not an asset-sale gain; no investing gains or other noncash items are included. No tax benefit is modeled for losses. FCF here means operating cash flow less capex; other adjustments are omitted.
Other fixed assumptions: revenue 500, COGS excluding D&A 200, other opex excluding D&A 120, interest 10, nonoperating income 0, tax rate 25%. Open the full experiment to adjust them.
From the first transaction
to the bigger picture.
Start with the business
Business models · Assets, liabilities, equity · Cash versus accrual · Income statement
4 units02Follow the transactions
Revenue recognition · COGS and gross margin · Capitalization · Identifiable intangibles
4 units03Read the performance
Debt and interest · Equity and distributions · Cash flow classification · Profit subtotals
4 units04Understand the reporting
Book versus tax · Tax bases and timing · 10-K, 10-Q and 8-K · Periods, units and restatements
4 units05Think like an analyst
Ratio families · Contribution and break-even · Drivers and scenarios · Time value of money
4 units06Put it all together
Control and consolidation · Perimeter and historical accounts · Quality of earnings · A linked financial teardown
4 unitsUnderstanding takes more than remembering a term.
You’ll calculate, explain, challenge an assumption and revisit what you learn. Your written explanations stay private and are self-assessed against a rubric.