Lesson 01 — The Analysis Framework
Week 12 · Lesson 1 of 2 · Week 12 — Your First Stock Analysis (Capstone)
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What does the company sell? Who are its customers? What's its competitive advantage (moat)? What sector is it in? 5year revenue trend and growth rate Margin...
Your 6-step analysis framework
Step 1: Business Understanding (10 min)
- What does the company sell?
- Who are its customers?
- What's its competitive advantage (moat)?
- What sector is it in?
Step 2: P&L Analysis (15 min)
- 5-year revenue trend and growth rate
- Margin trends: Gross, EBITDA, Net
- EPS and EPS CAGR
- Operating vs non-operating income mix
Step 3: Balance Sheet Analysis (10 min)
- Asset composition (current vs non-current)
- Debt levels and D/E ratio
- Working capital and current ratio
- Book value per share
Step 4: Cash Flow Analysis (10 min)
- CFO trend and CFO/PAT ratio
- Capex pattern
- Free Cash Flow
- Cash flow red flags check
Step 5: Ratio Scorecard (10 min)
| Ratio | Value | Good? |
|---|---|---|
| ROE | > 15%? | |
| ROCE | > 15%? | |
| D/E | < 1? | |
| ICR | > 3×? | |
| Net Margin | > 8%? | |
| FCF Yield | > 3%? | |
| EPS CAGR (5yr) | > 15%? |
Step 6: Governance Check (10 min)
Run the Week 09 red flag checklist.
Total time: ~65 min per company
That's less than the time it takes to watch a cricket match — and much more valuable for your wealth!
Key takeaway
You now have a complete framework. Consistent application of this framework is what separates investors from gamblers.