The Field Guide50 chaptersFree · no account

Learn to read a company the way a desk analyst does.

Start anywhere. Every chapter is one idea, plainly written — then you drive it: sliders, real filings, live benchmarks, and a checkpoint that tells you whether it stuck.

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Three ways in

Pick the one that sounds like your problem. Each path is short and in order.

Read the filingsOpen a 10-K and know exactly where the truth lives — and which sections most investors skip.Start with the 10-K →Value the businessDCF, multiples, EV/EBITDA — the four lenses, and the moment each one quietly lies to you.Start with valuation →Judge the numbersSpot earnings that flatter, dilution that compounds, and management that destroys value.Start with quality →

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Pick a category. Each one opens with the three chapters to read first.

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01How to value a stockThe framing work that decides whether your model is worth the time.14 min 02Discounted cash flow (DCF)How to build a DCF that survives a skeptical PM, not just looks precise.16 min 03Dcf sensitivity analysisWhere your DCF actually breaks. Run this before quoting a target price.11 min

How to value a stockThe framing work that decides whether your model is worth the time.14 min Discounted cash flow (DCF)How to build a DCF that survives a skeptical PM, not just looks precise.16 min Dcf sensitivity analysisWhere your DCF actually breaks. Run this before quoting a target price.11 min DCF vs. comparablesDCF anchors to fundamentals; comps anchor to the market. Use both or get surprised.12 min How stock multiples workWhat multiples tell you, what they hide, and when to walk away from them.10 min Tech multiples guideWhy a tech multiple stops working the moment growth normalizes.12 min Stock valuation methods comparedDCF, P/E, and EV/EBITDA each answer a different question. Pick wrong and you waste months.12 min EBITDA, explainedEBITDA is a useful bridge and a dangerous destination. The line is here.9 min EV/EBITDAWhen EV/EBITDA is honest about a business and when it lies for the seller.10 min Enterprise value vs. market capWhy two companies at the same market cap can be priced wildly differently.8 min Free cash flow guideWhat free cash flow actually tells you about a business — and the three ways investors misuse it.12 min Free cash flow yieldFCF yield is the cleanest valuation lens you have. Use it without fooling yourself.10 min Price-to-book (P/B)P/B works for banks and asset-heavy businesses. It quietly fails for everything else.9 min Sum-of-the-partsHow to value a conglomerate without papering over its worst segment.12 min

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Which metrics matter most

For stock analysis, five metrics explain most of what you need to know: ROIC (value creation), P/E or EV/EBITDA (relative price), free cash flow conversion (earnings quality), debt-to-equity (financial risk), and revenue growth rate (trajectory). Start with ROIC and FCF conversion — they separate businesses that create value from those that destroy it. Layer in a valuation multiple, a leverage check, and the growth rate, and you have a complete first-pass picture of any company.

Financial metrics reference

60+ reference guides organized by where each metric appears in the analysis.

Income Statement

Revenue, costs, and the path from sales to net income.

RevenueThe top line — what a company earns before any costs.Cost of Goods Sold (COGS)Direct costs of producing what a company sells.Gross ProfitRevenue minus COGS — the first profitability test.Operating Income (EBIT)Profit after operating costs but before interest and taxes.Net IncomeThe bottom line after every expense, interest, and tax.EBITDAOperating cash proxy used in valuations and debt covenants.Capital Expenditure (CapEx)Cash spent on long-term assets — key to free cash flow.

Valuation

Multiples, intrinsic value, and the math behind what a stock is worth.

P/E RatioPrice per dollar of earnings — the most-quoted valuation multiple.Intrinsic ValueWhat the business is actually worth independent of its price.EV/EBITDAEnterprise value multiple used for capital-structure-neutral comparison.PEG RatioP/E adjusted for growth — flags cheaply valued growers.Price-to-Book (P/B)Market price relative to net asset value on the balance sheet.Price-to-Sales (P/S)Revenue multiple used when earnings are zero or distorted.Net Present Value (NPV)Present value of future cash flows minus initial investment.Terminal ValueThe value of a business beyond the explicit forecast horizon.

Profitability

How efficiently a business converts revenue and capital into returns.

Return on Invested Capital (ROIC)The single best measure of whether a business creates value.Return on Assets (ROA)Net income per dollar of assets — asset efficiency test.Earnings Per Share (EPS)Net income allocated to each share of common stock.Gross MarginRevenue minus COGS as a percentage -- the first profitability test before operating costs.Return on Equity (ROE)Net income per dollar of shareholder equity -- measures how effectively management uses equity.Net Profit MarginBottom-line profit as a percentage of revenue after all costs, interest, and taxes.Operating MarginOperating profit as a percentage of revenue -- capital-structure-neutral efficiency measure.

Liquidity & Working Capital

Can the business meet short-term obligations and fund daily operations?

Working CapitalCurrent assets minus current liabilities — the operational buffer.Current RatioBroad short-term liquidity test (current assets ÷ current liabilities).Quick RatioLiquidity without inventory — a stricter solvency check.Cash RatioMost conservative liquidity metric: cash only vs. current liabilities.Operating Cash FlowCash generated from core business operations, pre-CapEx.

Capital Structure

How the business is financed — debt, equity, and their cost.

Debt-to-Equity RatioLeverage ratio comparing total debt to shareholder equity.Interest Coverage RatioEBIT ÷ interest expense — can the company service its debt?Cost of DebtAfter-tax interest rate a company pays on its borrowings.Cost of Equity (CAPM)The return equity investors require — key input to WACC.WACCWeighted average cost of capital — the minimum acceptable return.Invested CapitalTotal capital deployed in the business — denominator of ROIC.Enterprise ValueMarket cap plus net debt — the acquisition price of the business.

Balance Sheet

Assets, liabilities, and equity — the snapshot of what a company owns and owes.

Shareholders' EquityNet assets owned by shareholders — the residual claim after all liabilities.Retained EarningsCumulative profits kept in the business rather than paid as dividends.Long-Term DebtBorrowings due beyond one year — the primary leverage line on the balance sheet.Accounts PayableShort-term obligations to suppliers — a key working-capital lever.Accounts ReceivableRevenue earned but not yet collected — signals billing quality and cash conversion.Depreciation & AmortizationNon-cash charges that reduce book value and boost reported cash flow.

Numbers to measure against

The reference points a desk keeps in its head — with the judgment attached.

Software · median33×P/E for softwareRich — but often earned by durable, high-margin growth.The quality bar15%+ROIC that creates valueBelow the cost of capital, growth destroys value.Cash-reality check≥ 1.0FCF ÷ net incomeUnder 1.0 for years running is an earnings-quality flag.

Questions about stock analysis

What is fundamental analysis?

Fundamental analysis evaluates a stock by examining the underlying business — its financial statements, earnings quality, management decisions, and competitive position — to estimate what the company is actually worth and compare that to the price.

How do I analyze a stock for the first time?

Frame the business, read the most recent 10-K (income statement, balance sheet, cash flow), then judge earnings quality and capital allocation, and finally estimate intrinsic value and write down your thesis. The Field Guide's parts walk this in order.

What tools do professional stock analysts use?

DCF models, comparable-company analysis (P/E, EV/EBITDA), earnings-quality frameworks, and capital-allocation scorecards. Basis Report offers free versions of each, and every chapter carries the matching instrument.

How do I read a 10-K filing?

Start with Item 1 (Business) and Item 1A (Risk Factors) — diff last year's risks to find what's new — then read the MD&A, the financial statements, and the footnotes. The Field Guide has a full 10-K reading sequence with a red-flag checklist.

Where should a beginner start with financial analysis?

Start with the income statement — revenue, gross profit, and net income — then move to the balance sheet to assess leverage (debt-to-equity), and finally the cash flow statement to check whether earnings convert to cash. Once those fundamentals are clear, layer in valuation multiples (P/E, EV/EBITDA) and a return metric (ROIC) to judge price and quality together.

What is the difference between profitability and liquidity metrics?

Profitability metrics (ROIC, ROA, net margin) measure how efficiently a company earns returns over time. Liquidity metrics (current ratio, quick ratio, operating cash flow) measure whether a company can meet its short-term obligations today. A business can be profitable but illiquid — or liquid but unprofitable. You need both lenses.

Which financial ratios matter most for valuing a stock?

P/E and EV/EBITDA give you a relative price comparison against peers and history. ROIC tells you whether the business earns above its cost of capital. Free cash flow yield anchors the price to real cash, not accounting earnings. Debt-to-equity flags financial risk. Together these five ratios cover valuation, quality, and risk.

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