Income statement
This transaction only
| Revenue | ₹12,00,000 |
|---|---|
| Cost of goods sold | (₹7,50,000) |
| Profit before tax | ₹4,50,000 |
| Income tax at 25%, accrued | (₹1,12,500) |
| Net incomeflows to retained earnings | ₹3,37,500 |
Read the accounts, then value the company.
A free course in reading a company's filings and working out what it's worth, with every example done in rupees and in dollars. 228 modules, each with a quiz at the end, and you can read all of them right here.
4.1 million words228 modules4 tracksfree, no account needed to read
One credit sale, followed through the three statements
the first lessonIt's the first thing the course teaches. The sale posts from the income statement to the balance sheet and on to the cash flow, and every line ties to another. Pick a currency and check any figure you like. They all add up.
The worked example, in rupees and in dollars
A distributor ships ₹12,00,000 of goods on 60-day credit. The goods cost ₹7,50,000. No cash changes hands this month.
Balance sheet
Change from the transaction
| Trade receivables | ₹12,00,000 |
|---|---|
| Inventory | (₹7,50,000) |
| Cashnothing was collected | ₹0 |
| Total assets | ₹4,50,000 |
| Tax payable | ₹1,12,500 |
| Retained earningsfrom net income | ₹3,37,500 |
| Total liabilities and equity | ₹4,50,000 |
Cash flow statement
Indirect method, change
| Net income | ₹3,37,500 |
|---|---|
| Increase in receivables | (₹12,00,000) |
| Decrease in inventory | ₹7,50,000 |
| Increase in tax payable | ₹1,12,500 |
| Cash from operations | ₹0 |
| Net change in cashties to the cash line | ₹0 |
- Where the profit wentNet income of ₹3,37,500 is the only thing that moved retained earnings.
- Both sides moved by the same amountAssets rose ₹4,50,000; liabilities and equity rose ₹4,50,000.
- Profit, but no cash yetOperations produced ₹0 of cash, which is what the cash line says.
25% is the base corporate rate for a domestic company under ₹400 crore of turnover, before surcharge and cess. The tax has been accrued but not paid yet, so it sits in liabilities this month. The figures only show what this one sale changed.
A distributor ships $60,000 of goods on 60-day credit. The goods cost $37,500. No cash changes hands this month.
Income statement
This transaction only
| Revenue | $60,000 |
|---|---|
| Cost of goods sold | ($37,500) |
| Profit before tax | $22,500 |
| Income tax at 21%, accrued | ($4,725) |
| Net incomeflows to retained earnings | $17,775 |
Balance sheet
Change from the transaction
| Trade receivables | $60,000 |
|---|---|
| Inventory | ($37,500) |
| Cashnothing was collected | $0 |
| Total assets | $22,500 |
| Tax payable | $4,725 |
| Retained earningsfrom net income | $17,775 |
| Total liabilities and equity | $22,500 |
Cash flow statement
Indirect method, change
| Net income | $17,775 |
|---|---|
| Increase in receivables | ($60,000) |
| Decrease in inventory | $37,500 |
| Increase in tax payable | $4,725 |
| Cash from operations | $0 |
| Net change in cashties to the cash line | $0 |
- Where the profit wentNet income of $17,775 is the only thing that moved retained earnings.
- Both sides moved by the same amountAssets rose $22,500; liabilities and equity rose $22,500.
- Profit, but no cash yetOperations produced $0 of cash, which is what the cash line says.
21% is the federal statutory corporate rate; state income tax is on top of it. The tax has been accrued but not paid yet, so it sits in liabilities this month. The figures only show what this one sale changed.
The course in figures
counted from the course itselfModules228
Flashcards8,987
Quiz items6,727
Worked case labs54
Code exercises243
Excel labs20
Tracks4
The four tracks are 168 Finance, 22 Consulting, 20 Excel and 18 Presentation modules. Indian and US companies don't file the same way, so the examples come in both currencies and you learn to read both.
How a module works
3.5 to 40 hours each- 01
Read it
Each module is a long read with the numbers worked out as you go, and each states its own study time: 3.5 to 40 hours, about 16 on average. You can read it here, or in the app, where the next one opens as you finish.
- 02
Pass the gate
The gate is a quiz at the end. You need 85%, or 90% on 22 of the 228, and if you miss it the module comes back for another go.
- 03
Review on a schedule
Every module adds flashcards to your deck, and we bring each one back just as you're about to forget it. A card comes back about 7 to 10 times over a year, more often if you keep missing it.
- 04
Apply it
There are 54 worked case labs, 14 consulting cases and 35 pointers to cases published elsewhere (15 of those cost money to read), 243 auto-graded code exercises, and an investing simulator that scores how you decided each trade.
The curriculum, phase by phase
every module, in orderStart here
Phase 0 · 12 modules- The Map, the Machine & the Five QuestionsFinance · 1 h 31 min of readingM0.01
- How Capital Markets Work: India & USFinance · 2 h 6 min of readingM0.02
- Financial Literacy BootcampFinance · 1 h 29 min of readingM0.03
- The Analyst's Toolkit & Knowledge SystemFinance · 1 h 39 min of readingM0.04
- Your First Annual Report, GuidedFinance · 1 h 37 min of readingM0.05
- The Money You Actually Keep: Products, Costs and TaxesFinance · 2 h 21 min of readingM0.06
- Interface, Navigation & Entering Data RightExcel · 57 min of readingEX0.01
- Formulas I: References, Names & LogicExcel · 1 h 4 min of readingEX0.02
- The Consulting Mind: Structure, Hypothesis, Answer-FirstConsulting · 1 h 18 min of readingCN0.01
- The Engagement: Proposal to Trusted AdvisorConsulting · 1 h 21 min of readingCN0.02
- The Communicator's Mindset: Audience, Message, MediumPresentation · 1 h 41 min of readingPR0.01
- PowerPoint Ground-Up: Interface, Navigation, Sections and File CraftPresentation · 1 h 58 min of readingPR0.02
The pages people search for most
all 1,154 concept pages- Airline unit economics
- Asset liability management
- Invested capital
- Issue tree
- Foreign exchange reserves
- Economic moat
- Real interest rate
- Expected credit loss
- Unlevered beta
- Brier score
- Price elasticity of demand
- Compound annual growth rate
- Churn rate
- Sterilised intervention
- Consolidated financial statements
- NOPAT formula
- FCFF
- Accruals ratio
- Residual income valuation
- WACC
How the site is paid for
Everything here is free, and there's no paid plan. The adverts on these pages pay for the hosting: they're served by Adsterra, and by Google once it approves the site, and picked from the page you're reading, never from your record. The app's own adverts are for the course itself, and in the app you'll never see an advert beside a quiz, a lab or anything that's graded.
The about page says what the site is and isn't, how a module is checked, and how to report a mistake.
Nothing is locked, there's no trial, and the course doesn't close up later on. If you ever see a page suggesting otherwise, it's a mistake, so tell us.
Start with the first module.
The Map, the Machine & the Five Questions is 1 h 31 min of reading, and the app takes you through its quiz at the end. No account until Phase 1.