Financial education
Revenue, margins, working capital and the cash a business actually uses.
Explore fixed and variable costs through a hypothetical service business, showing how operating leverage magnifies both expansion and contraction.
Calculate a hypothetical break-even volume, then examine how contribution per unit, capacity limits, and cash commitments alter the conclusion.
Reconcile EBITDA to earnings and test its limits with two hypothetical firms whose identical EBITDA masks different investment and financing needs.
Evaluate earnings adjustments by recurrence, symmetry, and business necessity, using a hypothetical reconciliation rather than accepting labels at face value.
Compare common free-cash-flow constructions and distinguish operating cash less capital spending from cash remaining after contractual commitments.
Evaluate the judgment involved in splitting capital spending between maintenance and growth, and use sensitivities instead of assuming depreciation is a proxy.
Compare interest-bearing debt and total-liability leverage ratios, then examine how buybacks and negative equity can make a familiar ratio misleading.
Compare EBIT-based interest coverage under hypothetical earnings and interest changes, while distinguishing accounting coverage from actual debt-service cash.
Calculate gross and net debt under different cash-availability assumptions, and examine why netting does not remove maturity or contractual risk.
Analyze return on equity using average book capital, and see how distributions, losses, and asset recognition can alter the ratio without changing profit.
Decompose hypothetical return on equity into margin, asset turnover, and the equity multiplier, and distinguish operational improvement from added leverage.
Construct a hypothetical ROIC with clearly defined operating earnings and capital, then test the impact of goodwill, excess cash, and tax assumptions.
