Change something.
Understand why.
Make a prediction, move an input, and trace the consequences.
The earnings & cash bridge
Can EBITDA rise while free cash flow falls?
EXPERIMENT 02The transaction machine
Which transactions change profit, and which only change the balance sheet?
EXPERIMENT 03One transaction, three statements
Does borrowing money improve net income?
EXPERIMENT 04The two-clock experiment
After month three, how much of a prepaid annual contract has been earned?
EXPERIMENT 05Follow the inventory layers
When input prices rise, which method produces more gross profit?
EXPERIMENT 06An asset across its useful life
Does a longer estimated life change the machine’s original cash price?
EXPERIMENT 07What did the buyer pay for?
Does a higher fair value for identifiable assets increase or decrease goodwill?
EXPERIMENT 08Interest is not principal
What happens if the annual payment is smaller than the interest charge?
EXPERIMENT 09Slice the earnings
Can EPS rise even when total earnings do not?
EXPERIMENT 10The cash tied up in growth
Why can collecting ten days sooner release cash without creating new revenue?
EXPERIMENT 11The book-to-tax bridge
If tax depreciation is faster, does total book tax expense necessarily fall?
EXPERIMENT 12The filing evidence desk
Where would you verify whether reported revenue includes an acquisition?
EXPERIMENT 13Make the periods comparable
How do you construct LTM revenue without double-counting the latest six months?
EXPERIMENT 14The return engine
Can a low-margin business earn a high return on capital?
EXPERIMENT 15The break-even frontier
Can selling more units make the business lose more money?
EXPERIMENT 16Growth meets the cash constraint
Can faster growth require new funding even when forecast profit is positive?
EXPERIMENT 17What is the future worth today?
How much of this enterprise value depends on the terminal period?
EXPERIMENT 18The standalone cost bridge
Why is adding back every corporate allocation usually too optimistic?
EXPERIMENT 19Challenge the adjusted earnings
Which exclusions explain performance, and which hide an ongoing cost?