Reading the accounts like an analyst

Ratios, cash against profit, earnings quality and credit, practised on real companies' annual reports.

5 lessons, about 47 minutes in all. Take them in order.

The three statements and how they link 10 min
Trace a real company's profit into its balance sheet and its cash, the first job an analyst is given, using Costco's latest annual report.
Common-size statements and trends 9 min
Turn three years of a real retailer's accounts into percentages and index numbers to see what changed, and check what each figure is a percentage of.
Profitability ratios: margins, ROA and ROE 9 min
Compare two real rivals' margins and returns, and find out when a return on equity stops meaning anything: Home Depot and Lowe's.
Efficiency ratios and the cash conversion cycle 9 min
Nike's receivables jumped a quarter on flat sales. Work out the days, follow the cash, and find what's really inside the number.
DuPont analysis: where ROE comes from 10 min
Target's return on equity fell from 29% to 24%. Split it into margin, turnover and leverage to find out why, and how much of what's left is real.