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Clear filtersThe Cash Flow Statement
The statement that reconciles reported profit to cash that actually moved. It is the hardest of the three to dress up, which is why experienced readers start here.
EBITDA, and the Argument About It
Earnings before interest, taxes, depreciation and amortization is the most used and most criticised measure in finance. Both the use and the criticism are reasonable.
Free Cash Flow
The cash a business produces after the spending required to keep producing it. It is what funds dividends, buybacks, debt repayment and acquisitions.
GAAP and Non-GAAP
Filed statements follow standardised rules. The headline numbers a company puts in its press release frequently do not, and the reconciliation between the two is where the reading happens.
Debt, Leverage and Coverage
Borrowing magnifies returns in both directions. The ratios that matter are how much is owed relative to earnings, and how comfortably the interest is covered.
Leases
Lease obligations were once disclosed in a footnote and are now on the balance sheet. The change made a large existing liability visible without altering any economics.
Inventory Accounting
Which costs are assigned to goods sold is a policy choice. In a period of changing prices it changes reported profit, taxes and the balance sheet.