Stocks & Fundamental Analysis
Learn how shares and stock exchanges work and how to read and analyse a company's financial statements, ratios and valuation in a structured, repeatable way. The course builds analytical skills; it does not promise returns.
Self-study course Self-study course: written lessons, videos and downloadable materials for independent learning. There is no supervision, assessment, individual feedback or tutoring. Self-check quizzes are evaluated automatically in your browser — we do not see your results.
All 13 lessons free
Before you start
- Basic arithmetic with percentages
- Know the difference between revenue, profit and cash flow (covered in the Business course)
- Pen, paper and a calculator or spreadsheet
What you will be able to do
- Explain what a share is, which rights it gives and how companies raise equity capital
- Describe how an exchange sets prices in auctions and continuous trading
- Read an income statement, balance sheet and cash flow statement and calculate free cash flow
- Calculate and interpret margins, ROE, ROIC, debt ratios, interest coverage and liquidity ratios
- Value a company with multiples and a simple discounted cash flow model and name their limits
- Apply a written checklist and research routine to analyse a listed company
Lessons in this course
What a share really is: ownership, shareholder rights and how companies raise capital
Understand what you legally own when you buy a share, which rights come with it, and how share issues change your ownership.
How stock exchanges work: IPOs, listings, indices, auctions and trading hours
Learn how a company gets listed, how an exchange determines prices in auctions and continuous trading, and what an index measures.
Reading an income statement: revenue, costs, EBIT and net income
Read an income statement line by line and calculate gross profit, EBIT, EBITDA, net income and earnings per share.
Reading a balance sheet: assets, liabilities, equity and what they reveal
Read a balance sheet, check the accounting equation and calculate book value, tangible book value, working capital and the equity ratio.
Reading a cash flow statement: operating, investing and financing cash flow, free cash flow
Read the three parts of the cash flow statement, rebuild operating cash flow with the indirect method and calculate free cash flow.
Profitability and efficiency ratios: gross/operating margin, ROE and ROIC
Calculate margins, return on equity and return on invested capital, and use the DuPont formula to see what really drives returns.
Financial health: debt ratios, interest coverage and liquidity ratios
Measure a company's debt load, its ability to pay interest and its short-term liquidity, and stress-test them for a bad year.
Valuation multiples: P/E, P/B, EV/EBITDA and their traps
Calculate the three most used valuation multiples correctly and recognise the situations in which a low multiple is misleading.
Discounted cash flow basics: what a company's future cash is worth today
Build a simple five-year discounted cash flow model, add a terminal value and test how sensitive the result is to your assumptions.
Dividends: yield, payout ratio, dividend dates and sustainability
Calculate dividend yield and payout ratios, understand the dividend calendar, and judge whether a dividend is likely to be sustainable.
Business quality and competitive advantages (moats)
Identify the five main sources of a lasting competitive advantage and test them with numbers such as ROIC spread, margin stability and pricing power.
Corporate events: earnings reports, guidance, splits, buybacks and capital increases
Read earnings reports and guidance changes correctly and calculate the effect of stock splits, share buybacks and rights issues on shareholders.
Your stock analysis checklist and research routine
Combine the tools of this course into a written checklist, an investment thesis with exit criteria and a quarterly review routine.
ETFs, Funds & Long-Term Investing
Continue with "ETFs, Funds & Long-Term Investing" to learn how to combine many shares into a diversified, low-cost long-term portfolio.
View course outline