Investing, explained
Plain-English guides to the concepts behind every number on the terminal — valuation, ratios, accounting, and strategy. Written to be read, not skimmed.
Valuation
DCF, multiples, and how to price a stock.What is WACC, and why does it decide a company's value?
WACC is the blended return a company must earn to keep both its lenders and shareholders happy. It is also the dial that, more than any other, sets what a business is worth in a DCF.
What is EV/EBITDA, and why do analysts prefer it to P/E?
EV/EBITDA values the whole business against its core operating profit, ignoring capital structure and tax — which is exactly why it travels better than P/E for comparisons.
What is a DCF model, and how is it used to value stocks?
A discounted cash flow model values a company by the cash it will produce, discounted back to what that cash is worth today. Here is how it works, where the assumptions hide, and how to read one without being fooled by it.
Ratios & metrics
Reading profitability, returns, and leverage.What is the P/E ratio, and what does it actually tell you?
The price-to-earnings ratio is the most quoted number in investing and one of the most misread. It is a measure of expectations, not cheapness.
What is Return on Equity (ROE), and what makes it high?
ROE measures how much profit a company generates on shareholders' money. A high number can mean a great business — or just a lot of debt. The trick is knowing which.