Company Analysis: Past and Present

The first block of company analysis: what a research report contains, how to pin down a business model, and how to analyse a company's historical revenue drivers and pricing power, operating costs, margins and working capital, and its capital investments and capital structure.

1. 1. Company research reports and the analysis frameworkA research report turns company and industry analysis into a forecast, a valuation and a recommendation; an initiation report explains the company from scratch, while later reports only update what has changed.Free11 min
2. 2. Determining the business modelThe business model answers five questions (what, to whom, how, for how much, and what the company relies on) and is the first step of company analysis because it tells the analyst what drives the numbers.13 min
3. 3. Revenue drivers: bottom-up and top-downRevenue analysis breaks sales into drivers: bottom-up into volume and price or per-unit measures, top-down into market size and market share, so the analyst can see what really caused growth.14 min
4. 4. Pricing powerManagement can set any price it likes, but pricing power, the ability to raise prices without losing volume, depends on market structure and competitive position, and shows up as margins that hold or rise over time.11 min
5. 5. Operating costs and operating leverageHow much of a company's cost base is fixed decides how violently operating profit reacts to a change in sales; operating profit = Q × (P − VC) − FC, and the degree of operating leverage measures the sensitivity.Video · 6 min14 min
6. 6. Operating profitability and working capitalMargins built from functional cost lines (gross, EBITDA, EBIT), costs expressed as a percentage of revenue, and working capital measures (cash conversion cycle, net working capital to sales) show how efficiently a company turns revenue into profit and cash.15 min
7. 7. Integrated case: reading a marketplace from GMV, take rate and mixA marketplace has to be measured on the right base: share and drivers on GMV, pricing power on the take rate, and margins and inventory days on the part of the business that actually holds goods.15 min
8. 8. Capital investments and capital structureStart by mapping where capital came from and where it went, then judge whether investments earned more than the cost of capital (ROIC vs WACC) and how much risk the capital structure adds (leverage, coverage, DFL), tying it together with the ROE decomposition.15 min