Finance, explained from first principles, with real accounts

How a lesson works

1. Theory in plain wordsEach idea is explained from scratch, with the terms defined in the margin where you meet them. No finance background is assumed.
2. A ledger you can changeA small shop's books respond as you move the sliders, so you see why a number changes and not only that it does.
3. A real company's accountsThe same idea is then read in published figures from Titan, Info Edge and others, with the sources linked at the foot of the page.

The vocabulary every other topic uses. These lessons explain what finance is for, how profit is measured, what a business owns and owes, why the two sides of a balance sheet always match, and why a profitable business can still run short of cash.

1. What Is Finance20 minFinance explained from scratch: personal, business and public finance, money over time, and Titan's three big cash movements in a real year.
2. Revenue, Expenses and Profit21 minBuild a profit and loss account for a small shop with live sliders, then read the same statement in Titan's FY2023-24 accounts.
3. Assets, Liabilities and Equity22 minSort fifteen everyday items into assets, liabilities and equity, then read the balance sheet of a real listed company, Titan, line by line.
4. The Accounting Equation21 minWhy assets always equal liabilities plus equity: eight events in a new shop recorded live, then checked against Titan's real balance sheet.
5. Cash vs Profit23 minWhy profit and cash differ, with an adjustable shop ledger and a worked bridge from profit to cash using Titan's real FY2023-24 accounts.
6. Accrual vs Cash Accounting23 minHow accrual and cash accounting record the same contract differently, with a live ledger and Info Edge's billings, revenue and deferred revenue.

The three statements every company publishes, taken one at a time and then together. You learn the question each answers, how to read margins, classified balance sheets and cash flow sections, and how a single event travels through all three.

1. Introduction to Financial Statements21 minThe three financial statements and the question each answers, shown through one shop's first eight events and Titan's real FY2023-24 accounts.
2. The Income Statement24 minMargins, EPS and what sits below the profit line, with a live calculator and two real income statements, Titan's and Info Edge's.
3. The Balance Sheet22 minBuild a classified balance sheet block by block, then read the real balance sheets of Titan and Info Edge with four simple questions.
4. The Cash Flow Statement24 minSort fifteen events into operating, investing and financing cash flows, then read Titan's real FY2023-24 cash flow statement section by section.
5. How the Three Statements Connect25 minSee profit, cash and the balance sheet move together in a live one-year model, then trace the joins in Titan's and Info Edge's real accounts.

Where a business's money actually goes. These lessons follow cash through the working capital cycle, show the two ways of building the operating figure, work out what is left after reinvesting, build a fund flow statement from two balance sheets, and give five questions for judging whether a profit is backed by cash.

1. Working Capital and the Cash Cycle23 minReceivable, inventory and payable days, the cash cycle they add up to, and why growth uses cash, shown with a live calculator and Titan's real accounts.
2. Direct and Indirect Cash Flow23 minWork out cash from operations by counting cash and by correcting profit, then see what the adjustments do in Info Edge's and Titan's real statements.
3. Free Cash Flow23 minFree cash flow, the claims that follow it and why 'free' can mislead, with a live calculator and Titan's and Info Edge's real cash flow statements.
4. The Fund Flow Statement25 minBuild a fund flow statement from two balance sheets, with a live calculator and Titan's real FY2023-24 accounts, and see how it differs from cash flow.
5. Reading Cash Flow Quality24 minFive questions and ratios for judging whether profit is backed by cash, tried on a live example and on Titan's and Info Edge's real two-year cash flows.

How to turn the three statements into comparisons. These lessons start with growth and share-of-revenue tables, then build the liquidity, profitability and debt ratios one at a time, and finish by splitting return on equity into margin, asset turnover and borrowing.

1. Reading Statements with Ratios24 minWhat ratio analysis is for, how growth and share-of-revenue comparisons work, and where ratios mislead, with a live example and real accounts.
2. Liquidity Ratios24 minThe current, quick and cash ratios, how each is built and what it misses, with a live calculator and the real balance sheets of Titan and Info Edge.
3. Profitability Ratios25 minGross, operating and net margin, and return on assets, equity and capital employed, built from real statements with a live calculator and Titan and Info Edge.
4. Debt and Coverage Ratios25 minDebt to equity, the debt ratio and interest cover, with a stress-test calculator and the real balance sheets of Titan and Info Edge.
5. DuPont Analysis25 minSplit return on equity into net margin, asset turnover and the equity multiplier, with a live calculator and Titan's and Info Edge's real accounts.

Why a dollar today is worth more than a dollar next year, and how finance puts a number on the difference. These lessons build compounding, discounting, level payments, bond prices and investment appraisal one at a time, each with a calculator you can change.

1. Compound Interest25 minHow compound interest works: the formula, effective rates, real returns and the rule of 72, with a live calculator and Apple's net sales growth as an example.
2. Present Value26 minWhat a future payment is worth today: the discounting formula, the choice of rate, and a rebuild of Apple's lease liability, with a live calculator.
3. Annuities and Loans27 minHow to price level payments: annuity formulas, loan payments and amortization, perpetuities, with a live loan calculator and Apple's lease liability.
4. Bond Pricing and Yield27 minHow a bond is priced from its coupon and yield, why prices fall when rates rise, and what Apple's debt note shows, with a live bond calculator.
5. NPV, IRR and Payback28 minHow to judge a project with net present value, internal rate of return and payback, when they disagree, and Apple's lease as a borrowing rate. Live calculator.

Where a company's money comes from and what it costs. These lessons start with the choice between borrowing and owners' money, put a price on each, blend the two into a cost of capital, and end with how profit is returned to owners.

1. Capital Structure27 minHow the mix of debt and equity changes returns and risk, with a live leverage calculator and a look at Apple's balance sheet on book and market bases.
2. Cost of Debt25 minHow to find the cost of debt, why interest costs less after tax, and when the tax shield shrinks, with a live calculator and Apple's borrowing rates.
3. Cost of Equity and CAPM26 minHow to estimate the cost of equity with CAPM and the dividend growth formula, with a live calculator and what Apple's market value implies about growth.
4. WACC26 minHow to calculate WACC, why market weights matter, and why debt is not a free way to cut it, with a live calculator and Apple's cost of capital.
5. Dividends and Buybacks26 minHow dividends and buybacks return cash to owners, what a buyback does to earnings per share, and how Apple funded its fiscal 2025 payout. Live calculator.

How to put a value on a business. These lessons build the cash flow a valuation rests on, forecast it and value the years beyond the forecast, bridge from the value of the business to the value of a share, express the answer as a multiple, and finally run it backwards to read what a market price assumes.

1. Free Cash Flow to the Firm27 minHow to calculate free cash flow to the firm from operating profit, tax, capital spending and working capital, with a live calculator and Apple's accounts.
2. Terminal Value27 minHow a DCF forecast and terminal value work, why the terminal value is most of the total, and how rate and growth move it. Live calculator.
3. DCF Valuation28 minHow a discounted cash flow valuation works from forecast to value per share, with a live calculator, sensitivity tables and Apple's accounts.
4. Valuation Multiples27 minHow to calculate P/E, EV/EBITDA and other valuation multiples, what growth and risk justify, and when comparisons mislead. Live calculator, Apple's figures.
5. Reverse DCF26 minHow a reverse DCF turns a market price into the growth it assumes, with a live calculator and Apple's market value compared with its record.

The earlier modules taught the tools one at a time. These lessons use them together on real questions. The first tests a valuation with scenarios, the second shows how growth can drain a profitable business of cash, and the last three set Apple beside Microsoft, two companies of similar size that report in dollars under the same accounting rules, so that the differences are real ones.

1. Sensitivity and scenarios20 minHow to test a valuation: move one input at a time, then build worst, base and best cases, with a live calculator using Apple's accounts.
2. Why profit runs out of cash19 minHow growth turns profit into a cash shortage through receivables, stock and payables, with a live calculator and Apple and Microsoft compared.
3. Operating margin and cost structure19 minTake an operating margin apart into cost of sales, R&D and administration, and compare Apple and Microsoft with a live calculator.
4. Capital spending and payouts20 minHow Apple and Microsoft split cash from operations between capital spending and payouts, and how long each pattern could last, with a live calculator.
5. What two prices imply21 minRun a reverse DCF on Apple and Microsoft side by side to see the growth each market value needs, with a live calculator.

How managers use cost information to decide. These lessons sort costs by how they behave, find the sales a business needs to break even, measure how sensitive profit is to sales, work out what a product really costs, compare options by their relevant costs, and set budgets and explain the variances from them.

1. Fixed, variable and mixed costs21 minHow fixed, variable and mixed costs behave, how to classify costs and estimate their behaviour, with a live calculator and Apple and Microsoft's accounts.
2. Contribution margin and break-even22 minContribution margin, break-even point, target profit and margin of safety, worked on a bicycle maker with a live calculator and Apple and Microsoft's accounts.
3. Operating leverage20 minWhat operating leverage is, how fixed costs magnify profit swings, and how to calculate it, with a live calculator and Apple and Microsoft's results.
4. Product costing methods24 minHow overhead is assigned to products: absorption, variable and activity-based costing, with a live calculator and Apple and Microsoft's inventory.
5. Relevant costs and decisions24 minHow to decide with relevant costs: special orders, make or buy and scarce resources, with a live calculator and Apple and Microsoft's capital spending.
6. Budgets and variances26 minHow budgets, flexible budgets and standard costs work, and how to calculate price and usage variances, with a live calculator and Apple and Microsoft's costs.

How banks make money and how borrowing works. These lessons start with the bank itself, its balance sheet, margin and capital, then move to the real cost of a loan, how lenders measure and price credit risk, credit cards and revolving debt, refinancing and restructuring, and finally the bank statement and the cash a business holds.

1. How banks work26 minHow a bank makes money from the gap between loan and deposit rates, why capital matters, and how JPMorgan and HSBC compare, with a live bank calculator.
2. The true cost of borrowing24 minWhy a loan's quoted rate understates its cost: APR, fees, flat rates and early repayment, with a live loan calculator and a comparison of two offers.
3. Credit risk and expected loss26 minHow lenders measure credit risk with default probability and loss given default, price it into loan rates, and how DBS and Citigroup compare, with a calculator.
4. Credit cards and revolving debt24 minHow credit card interest, grace periods and minimum payments work, how long a balance takes to clear, and how Capital One and Amex losses compare.
5. Refinancing and restructuring26 minHow to tell whether refinancing pays off: monthly saving, break-even, term trap and costs, plus two 2025 company refinancings and how restructuring differs.
6. Bank reconciliation and cash24 minHow to reconcile a bank statement to the books, which items need entries, and how Alphabet and Meta hold cash, with a live reconciliation calculator.

How shares and bonds are sold, traded and measured. These lessons start with the markets and the orders investors place, then cover what stocks, bonds and funds are, how risk and return are measured, why diversification works, how options and futures pay off, what fees and tax take, and how investor behaviour and unreliable sources cause losses.

1. How securities markets work22 minPrimary and secondary markets, the order book, bid-ask spread, market and limit orders and index weighting, with a live order calculator and two real IPOs.
2. Stocks, bonds and funds24 minWhat stocks, bonds and funds are, who is paid first, and how Coca-Cola and PepsiCo finance themselves, with a live calculator of returns to owners and lenders.
3. Risk and return24 minTotal return, compounded return and standard deviation, with a calculator comparing US stocks and Treasury bonds across periods from 2000 to 2024.
4. Diversification26 minHow correlation, asset allocation and rebalancing change portfolio risk, with a live stock and bond mix calculator built on real US returns from 2000 to 2024.
5. Options and futures26 minHow calls, puts and futures pay off, with a live payoff calculator, the size of a real oil futures contract, and a worked hedge. Education, not advice.
6. Fees, taxes and net returns24 minHow the expense ratio, sales charge and tax shrink what an investor keeps, with a live calculator comparing two real global funds over decades.
7. Biases and evaluating sources26 minLoss aversion, herd behaviour and other investor biases, the cost of reacting to a bad year, and the SEC's red flags for judging an investment claim.

How prices, inflation, growth, interest rates and exchange rates work, and why they matter to companies and investors. These lessons start with a single market and move to the whole economy: how a price is set, how inflation is measured, how output and jobs are counted, what central banks do, what the yield curve shows, how exchange rates and a country's payments work, and how a government's debt changes over time.

1. Supply, demand and prices24 minHow demand, supply and elasticity set prices, with a live calculator and two real cases: the egg price spike at Cal-Maine and Tesla's 2023 price cuts.
2. Inflation26 minWhat inflation is, how a price index is built, what causes it, and how one shock reaches the headline rate, with a calculator using real US CPI weights.
3. GDP, cycles and jobs27 minHow GDP is measured, how recessions are dated, what the unemployment rate misses and which indicators lead, with a live jobs calculator.
4. Central banks and interest rates28 minWhat the Fed and the ECB are asked to do, how rate changes spread, and a live Taylor rule calculator, with Lennar as a real-company example.
5. Yield curves28 minHow to read the Treasury yield curve, why it inverts and what that signals, with a live calculator and two real banks as examples.
6. Exchange rates and payments28 minHow exchange rates work, what the balance of payments records and how currency moves company results, with a live calculator.
7. Fiscal policy and public debt29 minDeficits, debt and why a debt ratio rises or falls, with a live calculator, US and Japan data and two companies' tax rates.

How a household reads and plans its own money. These lessons start with the personal balance sheet and cash flow, then cover budgeting, emergency funds, paying down debt, insurance, retirement saving and inflation, the line between tax planning and tax evasion, and how to set goals and test them against an uncertain return.

1. Net worth and cash flow24 minBuild a personal balance sheet and cash flow, see why net worth changes by more than you save, and compare with Federal Reserve data.
2. Budgeting and trade-offs22 minHow to build a budget, tell needs from wants, and see trade-offs in dollars, with a live calculator and US household spending data.
3. Emergency funds and goals22 minHow big an emergency fund should be, how long it takes to build, and how sinking funds work, with a calculator and Federal Reserve data.
4. Paying down debt24 minCompare the avalanche and snowball methods on four debts, with a live calculator and New York Fed and Federal Reserve data.
5. Insurance fundamentals24 minHow premiums, deductibles and limits work, with a live calculator and the 2025 results of Progressive and Allstate.
6. Retirement planning26 minHow savings compound, why the real return matters and how a pot becomes income, with a live calculator and Fed and SSA data.
7. Tax planning and evasion22 minLawful tax planning versus avoidance and evasion, how tax bands and marginal rates work, and OECD data on tax on wages.
8. Goals and uncertainty26 minTurn a financial goal into a monthly amount, then test it against real US stock history and a savings account with a live calculator.

How losses are measured and managed. These lessons start with value at risk and expected shortfall, then cover interest-rate risk and duration, hedging currency risk with forwards, liquidity risk and bank runs, operational and concentration risk, and stress tests within enterprise risk management.

1. Value at risk26 minCompute value at risk and expected shortfall from 97 years of real S&P 500 returns, and compare them with a normal curve using a live calculator.
2. Interest-rate risk27 minMeasure interest-rate risk with duration, then see how a bank's assets, liabilities and equity react when yields rise, with a live calculator.
3. Hedging currency risk26 minSee how a forward contract fixes an exchange rate, what it costs, and how hedge ratios change profit across 26 years of real euro-dollar moves.
4. Liquidity risk26 minSee why a bank with more assets than debts can still fail, how the liquidity coverage ratio works, and how deposits left SVB, with a live calculator.
5. Operational and concentration risk26 minSee what a systems outage cost Delta, how banks set capital for operational risk, and what losing a big customer does to profit, with a live calculator.
6. Stress tests and risk management26 minLearn how the Fed stress-tests banks, how a reverse stress test works, and how risk appetite and three lines of defence fit together, with a live calculator.