Cash flow is the movement of cash into and out of the company. This course culminates what we we’ve been building towards through the previous courses on Revenue Model, Cost Structure and Earnings Power to determine how much cash a company is generating. Ultimately, valuation depends on the company’s ability to generate cash. Once we know how much cash the company will generate in the future, we’ll have the main building block we need to determine the intrinsic value of the stock.

Key Takeaways:

• Different line items on the Cash Flow Statement
• Relationship between free cash flow and valuation
• How to calculate unlevered and levered free cash flow

Corporate valuation is the cornerstone of stock investing. It’s the framework that quantifies what the company we’re investing is worth and how the market is pricing it. In other words, what we’re receiving relative to what we’re paying. We’ll learn the different sources of value (i.e. Enterprise Value, Cash & Cash Equivalents, Non-Operating Assets) and the recipients of value (i.e. Debt, Equity Value). With a solid understanding of corporate valuation, we’ll be equipped with a path forward to solve for a stock’s intrinsic value.

Key Takeaways:

• The concept of corporate valuation
• Sources and recipients of value
• How to calculate corporate value

Cost structure refers to the types and characteristics of the expenses incurred by a company. The structure of the business’s expenses, in terms of operating vs. non-operating, fixed vs. variable, cash vs. non-cash and recurring vs. non-recurring, has important implications on its earnings power and cash generation. Therefore, analyzing cost structure is an important step towards estimating the company’s and the stock’s intrinsic value. We’ll start by learning how expenses are recognized (similar to revenue recognition), and then go through the characteristics and the common expense items one by one. Finally, we’ll learn how to forecast cost into the future.

Key Takeaways:

• Expense Recognition
• Cost structure characteristics
• How to forecast cost

Earnings power refers to the business’s ability to generate profits. This course builds on top of the three previous courses on Corporate Valuation, Revenue Model and Cost Structure to develop an integrated understanding of how companies make money and how it impacts valuation. We’ll learn the different earnings metrics, how they drive companies’ stock prices, and how to forecast future earnings. By the end of this course, we’ll be able to use the knowledge we developed to estimate future stock price and gauge the return on our investment.

Key Takeaways:

• Different earnings metrics and margins
• Relationship with valuation and stock price
• How to forecast earnings

Intrinsic valuation is the process to determine the intrinsic value of a stock by analyzing how much cash it will generate in the future and the annualized rate of return that investors require. We’ll start by learning about the concept of time value of money, which underpins every intrinsic valuation analysis. Then we’ll learn about how we would determine the annualized rate of return that investors should require on any investment. And finally, we’ll tie everything together and learn how to determine what all the future cash the company will give back to us is worth to us today given the annual return on investment we want to earn.

Key Takeaways:

• Time value of money
• Relationship between risk profile and required return
• Discounted Cash Flow (“DCF”) analysis

This course goes over the investor resources that we’ll utilize to analyze stocks and where to find them. We’ll learn the US government’s stock market regulating body, the reports it require public companies to disclose, as well as the valuable resources companies provide through Investor Relations. Once we know the type of information available to us and where to find them, we’ll be able to perform our investment analysis.

Key Takeaways:

• Where to find information
• Important SEC filings
• Resources through Investor Relations

Revenue model relates to how businesses generate revenue. Specifically, we’ll learn how companies recognize revenue, how to think about revenue drivers and how to forecast revenue into the future. Since cash trickles down from revenue, understanding how a company generates revenue has important implications not only on the quality of the business but also on the amount of cash it’ll be able to generate. We’re now entering the stage of our stock analysis where we solve for the stock’s intrinsic value.

Key Takeaways:

• Revenue recognition
• Revenue streams and drivers
• How to forecast revenue

Risk reward relates to the evaluation of the risk and reward profile of an investment opportunity to come to the decision of whether we should invest. Investing is not an exercise to invest in stocks with the highest return potential because that may come with disproportionally high risks and lead to permanent capital loss. Rather, astute investors look for opportunities that offer the most attractive risk-adjusted return. We’ll start by learning the different measurements of reward and the different types of risks. Then we’ll learn how to think about investments with the most attractive risk reward dynamics.

Key Takeaways:

• Different measurements of return
• Different types of risks
• Balancing risk and return

This course goes over important stock basics and establishes the context for the investment analysis we’ll learn in the subsequent courses. We’ll learn what stocks are, how to calculate ownership interest, different types of stocks, how the stock market functions, and our rights as shareholders. With a solid grasp around the stock basics, we’ll be able to understand the rationale behind fundamental analysis and the investing strategy. Whether you’re a beginner or an experienced investor, this course will help you understand stock investing in a coherent manner.

Key Takeaways:

• The concept of stocks
• Fundamental analysis investing strategy
• Stock market dynamics