Money & investing · course 67 of 105

Read Financial Statements Like an Analyst

See how the income statement, balance sheet and cash flow fit together, then work out margins, debt, cash and free cash flow until seven red flags jump out.

6 modules

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Runs in Claude (claude.ai, the Claude apps or Claude Code) with your own Claude account. A course opens there as soon as your payment goes through; nothing is shipped.

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What it teaches

How the income statement, balance sheet and cash flow statement fit together; margins, growth and EPS; liquidity, debt, collection days and ROE; building cash from operations from net income; free cash flow; and seven red flags (plus how to say “no flag” when a company is clean). You work through two made-up companies: Harbor Coffee, which is healthy, and Quickfit Gear, whose profit jumps in FY2025 while the business underneath gets worse. By M4 you find out how. The AI asks 3 questions, places you, shows a short rule card per module, then drills you one item at a time and names the classic mistakes (“that’s COGS ÷ revenue, the cost share”, “an asset going up uses cash”).

How long

About 50-90 drill rounds depending on your level and misses, plus a 15-item final test. Plan on 3-5 sessions of 20-25 rounds. 111 questions in all (93 drill items, 18 concept questions), plus 17 in optional M5 (14 drill, 3 concept). A calculator is fine. The tutor gives a one-line save code at the end of each session; paste it into a new chat to carry on.

From the answer key · M0, row 0.16

Quickfit FY2025: net income was $495k but cash from operations was -$745k. In one line: how can a company report a profit and still lose cash running the business?

Think first, then show the answer

AnswerProfit is booked when the sale is made, not when the cash arrives: money tied up in unpaid customer bills (receivables) and unsold stock (inventory) is profit with no cash yet. (Quickfit’s NI also includes a one-time gain that brought in no operating cash.)

WhyKey facts: profit ≠ cash; receivables and/or inventory soaked up the cash

The wrong answer it catches“They spent it on capex” → capex is investing, not CFO; CFO is negative before capex

A calculator is fine. All numbers are $ thousands. Both companies are made up.
Profit is not cash. A sale counts as revenue when it’s made, even if the customer hasn’t paid yet.

The modules

6 modules, drilled one item at a time. The ones marked optional are offered along the way.

M0
The three statements and how they connect
Which statement, which line; the links between them
M1
Reading the income statement
Margins, growth, EPS
M2
Reading the balance sheet
Liquidity, debt, DSO/DIO, ROE, coverage
M3
Reading the cash flow statement
Build CFO, free cash flow, cash conversion, direction
M4
Red flags
Seven flags and “no flag”
M5
More ratios (net debt, payable days, cash conversion cycle, ROIC, DuPont, common-size)optional
Net debt, payable days, cash conversion cycle, ROIC, DuPont, common-size

Before it teaches, it asks

1
What brings you here: investing in stocks, a manager or founder reading your own numbers, a class or exam, or just curious? And have you ever read a real income statement or 10-K?
AI voice (ElevenLabs)
2
Harbor Coffee FY2025: revenue $10,580k, COGS $4,126k. What’s the gross margin?
3
Quickfit’s operating income went from $588k to $450k. What’s the growth rate?

What’s exact, and what isn’t

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Straight from the course’s own notes.

Exact: Both companies' statements are built by script from a few inputs, so every balance sheet balances, cash ties to the cash flow statement and retained earnings roll forward, every year (self-checked). Every numeric drill answer and listed wrong answer is computed from those statements (M4's mini cases and two M1 items from their own numbers) with exact decimal math (2026-10-08), with the rounding tolerance printed next to it.
One definition each, labeled: Ratios have competing textbook definitions. This course uses year-end balances (not averages), debt-to-equity on debt only, quick ratio = (cash + receivables) ÷ current liabilities.
Judgment: Word answers (which statement, why D&A is added back, red-flag reasoning) are graded on the key facts listed in the bank.
Not in it yet: Bookkeeping (debits and credits), GAAP/IFRS rules, leases, deferred tax, stock-based comp, segment notes, valuation (P/E, DCF), real companies' filings.