Mastering Financial Statement Interpretation

Introduction

You're reading to make better capital decisions from financial reports, so start by turning raw statements into cash‑flow driven intel that guides buy, hold, or sell choices. The core goal is simple: defintely translate the income statement, balance sheet, and cash‑flow statement into forward cash-focus on operating cash flow, free cash flow (FCF), and the FCF margin. Read the cash‑flow statement first; then scan the income statement for non‑cash items and the balance sheet for working capital shifts - one clean line: read cash flow first. Do the math next: compute FCF = operating cash flow - capital expenditures, then FCF margin = FCF ÷ revenue; one clean line: calculate FCF and margin. Finally, question any growth not backed by cash, rising receivables or inventory, and one‑off gains - one clean line: ask where the cash is. Here's the quick math to run on FY2025 numbers you pull: operating cash flow - CapEx = FCF; what this estimate hides: timing and one‑offs. Next: you (Investor) - pull the Company Name FY2025 cash‑flow and CapEx and compute FCF by Friday.

Key Takeaways

• Read the cash‑flow statement first; then reconcile income‑statement non‑cash items and balance‑sheet working‑capital shifts.
• Compute FCF = operating cash flow - CapEx and FCF margin = FCF ÷ revenue; beware timing effects and one‑offs.
• Question growth not backed by cash-watch rising receivables, inventory, and one‑time gains.
• Monitor core ratios (liquidity, profitability, efficiency, leverage, valuation) to guide buy/hold/sell decisions.
• Use a quick 5-10 min read (cash, debt, margins, CapEx, WC) then a 2-6 hr deep dive (3‑yr recon, peer normalization, scenario tests, simple DCF).

Mastering Financial Statement Interpretation

You're reading to make better capital decisions from financial reports; here's the direct takeaway: focus on cash generation first and reconcile earnings to cash. Turn statements into cash‑flow driven intel so you stop mistaking accounting profit for spendable money.

Balance sheet: what the company owns and owes at a date

The balance sheet is a snapshot as of a single date (for example, fiscal year end December 31, 2025) showing assets = liabilities + equity. Read the date first, then scan cash, short‑term debt, receivables, inventory, long‑term debt, and pension obligations.

Steps to use it fast:

• Note cash and short-term investments.
• Compute current ratio = current assets / current liabilities and quick ratio (exclude inventory).
• Flag large receivable or inventory buildups and rising short-term borrowings.
• Check long-term debt, maturities, and covenant indicators in notes.

Quick example (illustrative FY2025 numbers): current assets $250m, current liabilities $150m → current ratio 1.67. What to question: why did receivables grow? Is inventory obsolete? Are leases or guarantees off‑balance‑sheet?

Best practices: read the footnotes for classification changes, reconcile year‑over‑year balance movements, and convert noncurrent contingencies into stressed cash scenarios. One clear line: the balance sheet tells you the runway and the claims on that runway.

Income statement: profitability over a period; noncash items matter

The income statement reports performance over a period (e.g., fiscal year 2025). It shows revenue, costs, operating profit, interest, taxes, and net income. Remember many line items are noncash: depreciation, amortization, stock‑based compensation, impairments, and unrealized fair‑value gains or losses.

Steps to extract decision‑relevant info:

• Track revenue trend and compound annual growth (3 years).
• Calculate margins: gross, operating (EBIT), and net.
• Isolate recurring vs one‑time items (restructuring, asset sales).
• Convert EBITDA to operating cash by adding/subtracting noncash and working capital moves.

Illustrative FY2025 example: revenue $1,200m, gross profit $480m (40% gross margin), operating income $120m, net income $60m. Here's the quick math: remove noncash charges (say depreciation $40m) to assess cash generating capacity. What this hides: cyclical revenue, aggressive revenue recognition, and accounting policy shifts-check MD&A for explanations.

Best practices: normalize earnings (strip one‑offs), present EBITDA and adjusted net income, and always track the tax and interest cash burden. One clear line: income says how you earned profit, not how much cash you actually created.

Cash flow statement: actual cash generation and uses

The cash flow statement reconciles net income to cash changes through three sections: operating (CFO), investing (CFI, mainly capex), and financing (CFF). This is the scorekeeper for real cash - the item investors should respect most when valuing a company.

Concrete steps to read it:

• Start with cash from operations: net income plus noncash add‑backs minus working capital increases.
• Subtract capital expenditures to get free cash flow (FCF).
• Use financing flows to see net debt issuance, dividends, and buybacks.
• Reconcile beginning and ending cash to validate data and spot one‑offs.

Illustrative FY2025 walkthrough: net income $60m + depreciation $40m - increase in working capital $10m → CFO $90m. Subtract capex $50m → unlevered FCF $40m. Financing: debt issued $20m, dividends $10m, buybacks $5m → net financing inflow $5m. Net change in cash = $90m - $50m + $5m = $45m.

How the three link (practical build):

• Start with the income statement net income.
• From the balance sheet, compute year‑over‑year changes in working capital (ΔAR, ΔAP, ΔInventory).
• From investing activities, pull capex and disposals; from financing, pull debt and equity moves.
• Reconcile net income → CFO → FCF → change in net debt and ending cash.

Best practices: build a 3‑year recon: income statement line items, Δworking capital from balance sheets, and capex from cash flow. If cash from ops consistently lags net income, flag quality‑of‑earnings issues. One clear line: cash flow shows whether reported profits translate into spendable cash - the single most important check.

Core ratios that change decisions

Liquidity and leverage - short‑term survival and solvency under stress

You're checking if a company survives a cash shock and can still pay lenders; start here. Liquidity ratios measure near‑term capacity to meet obligations. Leverage ratios show structural solvency and how much earnings must cover debt costs.

Key formulas and quick checks:

• Current ratio = Current assets / Current liabilities - target typically 1.2-2.0 depending on industry.
• Quick ratio = (Cash + Marketable securities + Receivables) / Current liabilities - target often > 1.0 for low‑margin firms.
• Debt/EBITDA = Net debt / EBITDA - healthy range ≤3.0x for stable sectors; 3-6x needs scrutiny.
• Interest coverage = EBIT / Interest expense - safe when > 3x; below 1.5x is distress territory.

Step‑by‑step read:

• Pull latest balance sheet and trailing 12‑month (TTM) income statement.
• Compute current and quick ratios using most recent quarter.
• Calculate net debt = total debt - cash; compute Debt/EBITDA using most recent 12 months.
• Check interest coverage from trailing EBIT and last 12 months of interest expense.

Red flags and what to do:

• Rising current liabilities while cash falls - check maturing debt schedule; model 12‑month cash runway.
• Debt/EBITDA increasing >1x year‑over‑year - run covenant stress test (rates +200-400bps).
• Low interest coverage - consider probability of refinancing or covenant breach.

Example quick math (illustrative only): company reports cash $120m, debt $480m, EBITDA TTM $160m. Net debt = $360m, Debt/EBITDA = 2.25x, interest coverage = if EBIT = $140m and interest = $35m, then 4x. What this hides: off‑balance sheet leases, upcoming maturities, and contingent liabilities. Do a 12‑month cash flow forecast if Debt/EBITDA moves toward 3x - act fast on liquidity fixes.

Profitability and efficiency - margins you can defend and working capital cost

You want margins that survive price moves and working capital that doesn't eat cash. Profitability ratios show what stays after costs; efficiency ratios reveal capital tied up in operations.

Primary metrics and how to use them:

• Gross margin = (Revenue - COGS) / Revenue - shows pricing power and input pass‑through.
• Operating margin = EBIT / Revenue - reveals operating leverage and fixed cost absorption.
• Net margin = Net income / Revenue - after all financing and taxes; the residual the equity earns.
• Inventory turnover = COGS / Average inventory - higher is better; convert to days = 365 / turnover.
• Receivables days = Average receivables / Revenue × 365 - shows collection efficiency.

Practical steps:

• Compare margins to industry medians and the top quartile; defendable margin = stable or improving vs peers.
• Recast one‑offs: remove unusual gains/losses to get normalized margins over 3 years.
• Compute working capital days (inventory + receivables - payables in days); test sensitivity: +10 days working capital = cash outflow = Revenue/365 × 10.
• For manufacturing, expect inventory days 60-120; retail usually 30-60; long cycles need higher margins.

Example back‑of‑envelope: revenue $1,200m, COGS $720m → gross margin = 40%. If operating expenses = $300m, EBIT = $180m → operating margin = 15%. If average receivables = $120m, receivables days = ($120m / $1,200m)×365 = 36.5 days. What this estimate hides: seasonality, invoice factoring, or receivable concentration - check aging and top‑10 customers.

Valuation cues - market multiples and free cash flow yield to guide decisions

Valuation ratios tell if the market price buys durable cash flow or optimism. Use multiples for quick peer checks and free cash flow (FCF) yield for direct cash return comparisons.

Must‑use metrics and how to interpret them:

• EV/EBITDA = Enterprise value / EBITDA - good cross‑capital structure comparator; compare to peer median and 90th percentile.
• P/E = Share price / EPS - reflects earnings expectations and capital intensity differences.
• Free cash flow yield = FCF / Enterprise value or Market cap - FCF = CFO - Capex; yield shows cash return to investors.

Steps to apply valuations:

• Build peer set (5-12 companies) with similar margins, growth, and cyclicality.
• Calculate median and 90th percentile EV/EBITDA and P/E; position Company Name relative to those bands.
• Compute trailing and forward FCF yield; cross‑check with implied yield from DCF WACC assumptions.
• Adjust multiples for growth and return on invested capital (ROIC): higher ROIC justifies a premium multiple.

Quick math example: Enterprise value $2,400m, EBITDA TTM $300m → EV/EBITDA = 8.0x. If FCF TTM = $120m, FCF yield = 5.0%. If peers trade EV/EBITDA median 10x, either there is a valuation gap or the company has lower growth/quality. What this hides: accounting differences, pension deficits, and cyclical peak/trough in EBITDA. Use scenario multiples: base, +20% margin normalization, -30% cyclical downturn to see valuation sensitivity.

Quality of earnings and accounting red flags

You want to know whether reported profits mean real cash or clever accounting - here's the direct takeaway: follow cash, isolate nonrecurring items, and require transparent notes before you trust growth. Read this as a short audit checklist you can apply in 10-90 minutes.

Spot one‑offs, aggressive revenue recognition, and big fair‑value swings

Oneoffs and accounting policy shifts change reported profit without changing underlying economics. Scan the income statement and notes for items labeled nonrecurring, gain on sale, impairment, restructuring, or litigation recoveries. Treat any single line item greater than 5 percent of revenue as material and worth reconciling to cash and disclosures.

Steps to run now:

• Compare year‑over‑year revenue against cash from operations; compute CFO / Net income.
• Flag when revenue grows > 20 percent year/Yr while CFO is flat or declining.
• Check percentage‑of‑completion vs completed‑contract methods and whether contracts use variable consideration or customer incentives.
• Read the fair‑value note for level 3 inputs and quantify swings; a fair‑value gain or loss > 2 percent of assets needs disclosure reconciliation.

Quick math example: net income = $100m, cash from ops = $40m → CFO / NI = 0.4; that's a red flag, especially if persistent. What this hides: early revenue recognition, channel stuffing, or revaluation swings that inflate profit without matching cash.

One‑liner: If revenue jumps but cash lags, dig deeper - numbers are lying in different places.

Watch changes in reserves, capitalizing vs expensing, related‑party deals

Reserves and capitalization choices shift profits between periods and between EBITDA and free cash flow. Look for reserve releases timed to smooth earnings and for increases in capitalizing activity that push costs off the P&L and onto the balance sheet.

Practical checks:

• Compare allowance for doubtful accounts, warranty, and inventory obsolescence as % of receivables, sales, and inventory respectively; a drop of > 30 percent YoY without operational improvement is suspect.
• Split R&D and software spend into expensed vs capitalized amounts; if capitalized spend rises to > 10 percent of revenue, check amortization schedules and cash spend consistency.
• Flag related‑party transactions in the footnotes: quantify amounts and pricing, and compare them to arm's‑length benchmarks; any recurring related‑party revenue or purchases > 1 percent of revenue require governance questions.
• Reconcile capitalized items to cash: high capitalized additions with low cash capex suggests accounting treatment, not lower cash outflow.

Example: reported EBITDA benefits from capitalizing $80m of software while cash capex is only $50m - confirm whether the extra $30m is genuine investment or timing/ policy choice. What this hides: temporarily boosted margins and weakened future free cash flow when amortization kicks in.

One‑liner: Capitalizing hides cash - follow the cash, not EBITDA.

Reconcile cash from ops vs reported earnings and check notes and management discussion for policy changes

Cash from operations (CFO) is the clearest reality check on reported earnings. Build a 3‑year reconciliation: Net income → add back D&A → adjust for working capital changes → subtract noncash gains = CFO. Do this annually to spot persistent gaps and turning points.

Stepwise approach:

• Create a table for the last three fiscal years showing Net income, CFO, D&A, change in working capital, capex, and Free Cash Flow (FCF).
• Compute CFO / Net income and FCF margin = FCF / Revenue. Flag CFO / NI < 0.6 or negative FCF margin for two years.
• Dig into the cash statement line items: large proceeds from asset sales, tax refunds, or sale‑leaseback inflows can inflate CFO temporarily; treat them as one‑offs unless recurring.
• Read the notes and Management Discussion & Analysis (MD&A) for policy changes: revenue recognition effective dates, lease accounting (ASC 842) adoption details, inventory method switches (LIFO→FIFO), and pension/OPEB assumption changes. Extract the quantitative impact disclosed.

Quick reconciliation example: Net income $120m + D&A $30m - ΔWC $25m - Capex $40m = FCF $85m. If reported earnings were propped by a $30m one‑time fair‑value gain, adjust NI down before comparing. What this estimate hides: cyclical receivables, inventory build for future sales, and off‑balance financing.

One‑liner: Reconcile the numbers - accounting is words, cash is reality.

Mastering Financial Statement Interpretation - Practical walkthrough

You want to turn financial reports into quick, decision-ready intel so you can act with confidence. The short takeaway: run a 5-10 minute quick read to flag danger, then a 2-6 hour recon to convert net income to cash and build a simple DCF.

Quick read

One-liner: get the cash, debt, margin trend, capex, and working-capital story in under 10 minutes.

Start with a short checklist you can do without rebuilding models.

• Cash balance: compare to last quarter and to upcoming debt maturities; flag if cash < operating needs for 3 months.
• Net debt: total debt less cash; watch if net debt / trailing EBITDA > 3-4x (industry dependent).
• Margin trend: 3‑year gross, operating, and net margins; flag falling operating margin > 300 bps.
• Capex run‑rate: last 12 months vs. D&A; if capex > D&A by > 25%, the company is reinvesting heavily.
• Working capital: look at receivables, inventory, payables days; a sudden rise in receivables days means revenue quality risk.

Best practices:

• Open the balance sheet and cash flow side-by-side.
• Prioritize items that move cash: debt maturities, covenant tests, discretionary capex.
• Use three figures (current, one year ago, three years ago) for quick trend sense.

Quick flags to act on: current ratio <1.0, quick ratio <0.8, operating margin down > 300 bps, or net debt / EBITDA > 4x. If you see one of these, stop and schedule a deeper dive - don't keep guessing.

Deep dive - build a 3‑year reconciliation of net income to cash flow

One-liner: reconcile every recurring line from net income to cash from operations for the last three fiscal years.

Goal: convert reported profit into actual cash generated and identify noncash distortions.

• Gather statements: income statement, balance sheet, cash flow statement, and notes for the last three fiscal years (most recent fiscal year = 2025).
• Create a 3‑column recon (FY2023, FY2024, FY2025): start with net income, then add noncash charges (depreciation, amortization, stock‑based comp), adjust for deferred taxes, and subtract gains/losses.
• Calculate ΔWorking Capital: ΔA/R + ΔInventory - ΔA/P; sign matters (increase in A/R reduces cash).
• Map investing/financing: separate sustaining capex vs. growth capex, acquisitions, asset sales, share repurchases, dividends, and debt issuance/repayments.
• Reconcile to reported cash from operations; any unexplained gap > 5-10% of CFO needs line-level comment.

Concrete steps and checks:

• Step 1 - Normalize nonrecurring items: remove one-time gains/losses, litigation inflows, insurance recoveries.
• Step 2 - Recast capex: if the company capitalizes R&D or selling costs, restate to expense for one column to see true recurring cash.
• Step 3 - Inspect tax cash vs. tax expense: big differences signal timing or deferred tax play.
• Step 4 - Review the notes for related‑party transactions and large fair‑value remeasurements.

Example quick recon math (illustrative): Net income $100m + D&A $30m - ΔWC $10m + deferred tax adjustment $5m = cash from ops $125m. What this hides: timing of collections, vendor payment cycles, and pension cash flows that may not be obvious.

Build a back‑of‑the‑envelope DCF, the quick math, and what it hides

One-liner: convert EBITDA to unlevered free cash flow, project 3-5 years, then compute a terminal value; use WACC to discount.

Step-by-step build (small model you can do in a spreadsheet):

• Start with trailing EBITDA (last 12 months). Example: EBITDA = $200m.
• Derive EBIT: EBITDA - D&A (example D&A = $40m → EBIT = $160m).
• Calculate NOPAT (net operating profit after tax): EBIT × (1 - tax rate). Example tax rate = 21% → NOPAT = $126.4m.
• Compute Unlevered Free Cash Flow (UFCF): NOPAT + D&A - capex - ΔNWC. Example capex = $50m, ΔNWC = $5m → UFCF = $111.4m.
• Project UFCF for 3-5 years using normalized margin and a conservative growth profile (explicit years). Example growth 3% annually.
• Terminal value (perpetuity): TV = UFCF_last × (1 + g) / (WACC - g). Example WACC = 9%, g = 2.5%.
• Discount cash flows and terminal value back at WACC to get enterprise value (EV), then subtract net debt to get equity value and divide by shares for price per share.

Here's the quick math in one block (example numbers):

• EBITDA: $200m
• - D&A: $40m → EBIT $160m
• × (1 - 21%) → NOPAT $126.4m
• + D&A $40m - capex $50m - ΔNWC $5m → UFCF $111.4m
• Terminal value at g 2.5%, WACC 9%: TV = 111.4 × 1.025 / (0.09 - 0.025) ≈ $1,741m (example)

What this estimate hides - the key risks to adjust for:

• Cyclicality: EBITDA in a peak year will inflate value; normalize margins to cycle‑adjusted averages.
• One‑time items: restructuring, asset sales, or tax credits can move UFCF; strip them out.
• Pension/OPEB obligations: large underfunded plans are future cash claims not captured in EBITDA.
• Working capital seasonality: retail or industrial companies can swing cash materially quarter-to-quarter.
• Lease obligations and off‑balance sheet items: convert to debt-equivalents when computing enterprise value.

What to do next: run the quick read on one target, then build the 3‑year recon and the B‑O‑E DCF to test whether market prices match cash reality. Finance: draft a 13‑week cash view and the 3‑year recon by Friday - you'll defintely learn where the real risks sit.

Context: industry, peers, and macro risks

You're sizing how industry context and macro shocks change the value and risk of a company so you can pick buy, hold, sell, or engagement actions fast. Here's the direct takeaway: benchmark against peer medians and the top quartile, map the company's macro exposures, run three simple scenarios, then tie each scenario to a clear action.

Normalize metrics by industry peer medians and 90th percentiles

Start with a clean peer set: include direct competitors, meaningful sub‑sector players, and two larger diversified comparables. Pull the last twelve months (LTM) or fiscal 2025 figures for revenue, EBITDA, net debt, capex, and free cash flow (FCF).

Steps to normalize and compute benchmarks:

• Collect LTM/fiscal 2025 figures from 10-20 peers
• Adjust each company for one‑offs (disposals, litigation, impairment)
• Calculate ratios: EV/EBITDA, P/E, FCF yield, EBITDA margin
• Compute the median and the 90th percentile for each ratio
• Flag where the company sits vs median and 90th

Best practice: use median for a baseline and the 90th percentile as a stretching target; compute percentiles in Excel with PERCENTILE.INC. One clean line: the median gives you the center; the 90th shows what great looks like.

What to watch when normalizing: differences in accounting (lease treatment, revenue recognition), fiscal year mismatches, and currency effects; adjust amounts to common definitions (e.g., unlevered FCF = EBITDA - cash taxes - capex - ΔNWC). If comparables are thin, widen the set to adjacent industries but note the bias.

Map macro exposure: rates, commodity prices, FX, regulatory shifts

Identify the company's direct macro levers and how sensitive cash flow is to each: interest rates, key commodity prices, FX, and regulatory policy. Create a short sensitivity table tying a plausible move to a cash or EBITDA change.

Practical steps:

• Interest: compute net debt × change in rate → interest impact
• Commodities: multiply unit exposure by price move → margin impact
• FX: apply revenue/expense mix to currency moves → EBITDA impact
• Regulation: list pending rules and estimate capex/compliance cost

Example rule of thumb: if net debt is $1.5bn, a 100bps rate rise raises annual interest by roughly $15m (net debt × 1%). Here's the quick math you should do for each lever, and defintely document sources for commodity and FX assumptions. One clean line: map each macro to a dollar P&L or cash number, not just narrative.

Notes on reliability: use central bank rate paths, futures for commodities, and forward FX; where markets are illiquid, widen sensitivity ranges and treat outputs as directional not exact.

Scenario test and translate into actions

Run three scenarios: base, downside, upside. Use plain, consistent shocks so you can compare outcomes across peers.

Scenario definitions and steps:

• Base: management plan + consensus macro inputs
• Downside: apply a 20-40% cash shock (sales drop, margin compression, or delayed receivables)
• Upside: share gains or margin recovery driving higher FCF

How to model quickly:

• Start from EBITDA → subtract taxes, capex, ΔNWC → get unlevered FCF
• Apply the cash shock as a direct reduction to FCF in years 1-2 for downside
• Discount at WACC or use FCF yield comparisons to peers

Decision rules tied to outcomes:

• Buy: base scenario yields FCF yield above peer median and downside keeps solvency intact
• Hold: base fair but downside materially impairs liquidity
• Sell: upside weak and downside breaches covenants or requires equity
• Engage management: downside shows structural issues (cash burn, recurring one‑offs)

One clean line: convert each scenario to a single headline action and a trigger - e.g., sell if net debt/EBITDA > 4.0x on the downside year.

What the scenarios hide: correlation risk (rates + FX + commodity moves together), covenant mechanics, and off‑balance sheet items. Always run a covenant check and a 13‑week cash model for the downside. Next step: you - pull fiscal 2025 LTM numbers for your target and three peers, then run the base and downside cash test; Finance: produce a 13‑week stress cash view by Friday.

Conclusion

You want to make capital decisions that actually move cash into your pocket, not just paper earnings - so focus on cash, defendable margins, and accounting reality checks. The quick takeaway: prioritize companies with clear free cash flow, stable core margins, and transparent accounting disclosures.

Focus: cash, margins you can defend, and accounting reality checks

You're reading to pick winners based on money that shows up in the bank, not GAAP tricks. Start by checking three numbers: operating cash flow, free cash flow (FCF), and core operating margin. If op cash covers operating needs and leaves FCF, that's real optionality.

One-liner: Cash beats earnings every time.

• Target: positive FCF for 3 consecutive years
• Flag: FCF variance > ±20% vs net income
• Prefer margins stable within ±200bps over cycles
• Require clear policy on revenue recognition
• Demand detailed notes for large fair-value moves

Practical checks: reconcile net income to cash from operations for the latest fiscal year (use the company's FY2025 statement), confirm capex is under 50% of depreciation if capex looks inflated, and watch for growing receivables or inventory days that outpace revenue growth. If reserves or allowances drop while sales grow modestly, treat that as a red flag - it often masks weaker underlying cash conversion.

Use a 3‑step checklist: quick read, 3‑year recon, peer+scenario overlay

Do this in order: a fast triage, a detailed reconciliation, then a comparative and scenario layer. The checklist forces discipline and keeps you from being misled by single-year results or one-time gains.

One-liner: Follow the checklist every time you open reports.

• Quick read: 5-10 minutes - cash, debt, margin trend
• 3‑year recon: 2-6 hours - net income to cash flow
• Peer compare: median and 90th percentile
• Scenario test: base, downside (20-40% cash shock), upside

Quick read steps: check FY2025 operating cash flow, total debt (short+long), and trailing twelve-month (TTM) operating margin trend. Deep recon: build a 3‑year (FY2023-FY2025) bridge from net income to cash from operations, isolating noncash items, working capital swings, and capex. Peer overlay: normalize margins by industry median; mark companies with EV/EBITDA or FCF yield materially outside peer bands for further review.

Next step for you: pick one company, run the quick read this week

Pick a company with available FY2025 filings and run the quick read now: confirm FY2025 operating cash, total debt, capex, and trailing margins. If any metric fails the quick test, escalate to a 3‑year recon before deciding to buy or hold.

One-liner: Do the 5-10 minute quick read today; it changes decisions fast.

• Owner: you
• Task: run quick read on one company
• Deadline: this week
• Output: note with 4 metrics and go/no-go

Concrete steps: pull FY2025 cash flow and balance sheet, record operating cash flow, free cash flow (OCF minus capex), total debt, and TTM operating margin; score each metric pass/fail; if two or more fails, schedule a 3‑year recon (owner: you) and have Finance draft a 13‑week cash view by Friday. What this hides: sector cyclicality, pension/OPEB liabilities, and off-balance-sheet leases - check notes early.