Log inStart free

C01

Financial Accounting

Read any company's financial statements like an analyst: what they say, what they hide, and the ratios that matter.

Start the course →27 lessons · first 2 free
  1. Reading an Annual ReportA company's annual report runs to a hundred pages. Analysts don't read it front to back. Learn the order they read it in, find the numbers that matter in seconds, and know which pages are facts and which are a sales pitch. · 12 minFree
  2. The Three Statements TogetherThe income statement, balance sheet and cash flow statement aren't three separate reports. They're one machine with three dials. Post a store's first year and watch all three move, then answer the question every finance interview asks. · 13 minFree
  3. Who Sets the Rules: Standards, Auditors and ControlsWhy should anyone believe a company's own numbers? Meet the referees: the standard setters who write the rules, the ideas behind them, the auditors who check them and the internal controls that catch mistakes. Then read Larkfield's auditor's report like a professional. · 13 min🔒 VIP
  4. Revenue RecognitionWhen has a company really earned its money? Not always when the cash arrives. Split a bike-plus-service bundle, sell gift cards, and see why revenue is the number most often bent, and how the five-step rule keeps it honest. · 13 min🔒 VIP
  5. Receivables and Bad DebtsA sale on credit is only as good as the customer who owes you. Build an aging schedule, set the allowance for bad debts, and see how a small estimate can quietly lift profit, and how analysts catch it with days sales outstanding. · 13 min🔒 VIP
  6. Inventory Methods and Write-DownsTwo identical shops can report different profits just by choosing which boxes they say they sold first. Compare FIFO, LIFO and average cost, write down jackets nobody wants, and learn the inventory questions that matter most to a lender. · 13 min🔒 VIP
  7. Long-Term Assets and Depreciation ChoicesSpend $20 million on stores and you can call it a cost today or an asset for ten years. That one choice moves profit and even operating cash flow. Read Larkfield's fixed-asset note, size up how old its stores are, and see how one of the biggest frauds ever worked. · 13 min🔒 VIP
  8. Intangibles, Goodwill and ImpairmentLarkfield's balance sheet carries $80 million it can't touch: a brand and goodwill from buying a bike maker. Work out where goodwill comes from, test it for impairment, and learn why lenders often subtract it altogether. · 13 min🔒 VIP
  9. Liabilities and ProvisionsSome debts come with an invoice. Others are guesses: warranty repairs, lawsuits, store closures. Learn when a possible cost goes on the balance sheet and when it hides in a note, and how over-cautious provisions can be saved up to flatter a bad year. · 13 min🔒 VIP
  10. Debt and Bonds on the Balance SheetAna's bank would join Larkfield's other lenders, so she needs to know exactly what's owed, when, and at what cost. Price a bond issued below face value, read the maturity schedule, and use the two ratios every lender checks first. · 14 min🔒 VIP
  11. LeasesLarkfield doesn't own a single store: it rents all 40. Those rent contracts are debt in all but name, and since 2019 they sit on the balance sheet. Turn a lease into a liability, see why IFRS and US GAAP report the same lease differently, and measure Larkfield's real borrowing. · 14 min🔒 VIP
  12. Income Taxes and Deferred TaxesCompanies keep two sets of numbers, legally: one for shareholders and one for the tax office. Watch the gap open and close as a deferred tax liability, reconcile Larkfield's tax rate, and learn why a sudden tax windfall should never impress you. · 13 min🔒 VIP
  13. Equity, Buybacks and EPSEarnings per share is the most quoted number on Wall Street, and one of the easiest to move without earning a cent more. Read Larkfield's equity statement, run a share buyback, and see why a lender reads "returning cash to shareholders" very differently from an investor. · 13 min🔒 VIP
  14. Stock-Based PayPaying staff in shares costs no cash, so some companies leave it out of their favourite profit number. Expense a share grant, count the extra shares options create, and take apart a rival's "adjusted EBITDA" to find the real one. · 13 min🔒 VIP
  15. Investments and Fair ValueThe same bond can sit on a balance sheet at what it cost or at what it's worth today, and the difference can be enormous when interest rates jump. Value a bond portfolio, see where gains and losses land, and learn why a $15 billion loss nobody had to record helped bring down a bank. · 14 min🔒 VIP
  16. Consolidation and AcquisitionsOwn 49% of a company and its debts stay off your balance sheet. Own 51% and every dollar of them lands on it. Learn the three ways ownership is reported, remove sales between group companies, and see why lenders "look through" clever stake sizes. · 13 min🔒 VIP
  17. Foreign Currency, Hedging and Comprehensive IncomeLarkfield buys tents in euros and plans stores in Canada. Currency moves can add or remove millions without a single extra sale. Watch an unhedged bill grow, lock it with a forward contract, translate a foreign subsidiary, and find the profit that never reaches the income statement. · 14 min🔒 VIP
  18. Pensions and Other Long-Term PromisesA promise to pay someone an income for life is a debt that can grow while you sleep. Value a pension promise, watch it swell when interest rates fall, and find the deficit hiding in the company Larkfield wants to buy into. · 13 min🔒 VIP
  19. The Cash Flow Statement in DepthLenders get repaid in cash, so Ana rebuilds Larkfield's operating cash flow herself from two balance sheets. Then she finds free cash flow, measures the cash conversion cycle, and spots the supplier-finance trick that makes cash flow look better than it is. · 14 min🔒 VIP
  20. Segments, Restatements and Events After Year EndGroup totals can hide a business that's booming next to one that's sinking. Break Larkfield into its segments, see how a change in estimate differs from fixing a mistake, and decide what to do when bad news arrives after year end but before the report goes out. · 13 min🔒 VIP
  21. Ratio AnalysisA number on its own means nothing; $75 million of profit is huge for a café chain and tiny for a bank. Ratios make companies and years comparable. Build Larkfield's ratio dashboard, then watch how one decision moves five ratios at once. · 14 min🔒 VIP
  22. DuPont: Where Returns Come FromTwo companies both earn a 20% return on equity. One sells luxury goods at fat margins; the other sells groceries fast on borrowed money. Split ROE into its three engines, find which one drives Larkfield, and see why the CEO's promised ROE jump doesn't impress a lender. · 13 min🔒 VIP
  23. Earnings Quality and Red FlagsEvery lesson so far has shown a dial management can turn. Now turn them all at once and watch profit rise with no extra cash. Then scan Larkfield's growth rates for the classic warning signs, and decide what Ana should do with what she finds. · 14 min🔒 VIP
  24. IFRS vs US GAAPMost of the world reports under IFRS; US companies use US GAAP. They agree on far more than they differ, but the differences land right on the numbers analysts love: EBITDA and operating cash flow. Run Larkfield through both rulebooks and translate a European rival onto the same basis. · 13 min🔒 VIP
  25. Comparing CompaniesIs Larkfield good, or just bigger? Turn three rivals' statements into percentages, put them on one accounting basis, and line them up in a peer table. Then see how the market prices each one, and where Larkfield really stands. · 14 min🔒 VIP
  26. Forecasting the Financial StatementsLenders are repaid from future cash, not last year's. Build Larkfield's 2026 forecast from a handful of drivers, see which assumptions matter most, and test management's rosy plan against your own base case. · 15 min🔒 VIP
  27. Boss: Should You Lend to This Company?Friday. Ana's recommendation is due. Build an adjusted Larkfield from every red flag in the course, stress-test the loan through a recession, decide the terms, and write the credit memo that goes to Kestrel's lending committee. · 18 min🔒 VIP