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Compounding Quality Profile picture
@QCompounding
Aug 9 • 8 tweets • 3 min read Twitter logo Read on Twitter
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Accounting is the language of business.

Via this 7-page cheat sheet you learn everything you need to know: Image
Principles, Formulas & Business Types: Image
Assets, Bonds & Depreciation: Image
Balance sheet: Image
Income Statement & Cash Flows: Image
Owners Equity: Image
Journal entries: Image
That's it for today.

If you like this, you'll LOVE our free course.

It teaches you how to read Financial Statements like a professional.

Grab it for free here: https://t.co/Xq8OSGltSceepurl.com/h9kw29T
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More from @QCompounding

Compounding Quality Profile picture
Aug 10
TED Talks are free education.

But 99% don't know the best ones to watch.

Here are 8 TED Talks about money you should watch:
1️⃣ Why the Rich are Getting Richer by Robert Kiyosaki: Image
2️⃣ 10 things I learned after losing a lot of money by Dorothée Loorbach: Image
Read 10 tweets
Compounding Quality Profile picture
Aug 8
The most important metric for investors?

Return On Invested Capital (ROIC)

I'll teach you everything you need to know in 2 minutes: Image
1️⃣ What is Return On Invested Capital?

Return on invested capital (ROIC) is a calculation used to determine how well a company allocates its capital to profitable projects or investments.
2️⃣ How high should ROIC be?

Capital allocation is the most important task of management.

As a rule of thumb, the ROIC should be higher than 10% and preferably higher than 15%.
Read 7 tweets
Compounding Quality Profile picture
Aug 6
Valuation masterclass

In this 700-page document you'll learn:

▪️How to value a company
▪️How to calculate ROIC
▪️The (dis)advantages of the PE Ratio
▪️The (dis)advantages of the EV/EBITDA
▪️How to a DCF
▪️The dangers of a DCF
▪️General thoughts on valuation

Grab it for free 👇 Image
The document will teach you everything you need to know about valuation.

Receive it for free here: https://t.co/JE89jeRFddeepurl.com/h9kw29
Image
Here are 52 books everyone should read: Image
Read 6 tweets
Compounding Quality Profile picture
Aug 6
The history of the stock market has been wild.

Here are 15 things I learned from over 100 years of stock data: Image
Lesson 1: Invest for the long term. In the short run, stock returns can be very volatile, but they are very robust in the long run.

Lesson 2: On average, you double your money in the stock market every 10 years.
Lesson 3: In the long run, stocks are less risky than bonds. For 20-year holding periods, stock returns have never been lower than inflation.

Lesson 4: Don’t try to time the market. Time in the market is way more important than timing the market.
Read 12 tweets
Compounding Quality Profile picture
Aug 5
10 Investing KPIs everyone should know

• Gross margin
• EBIT Margin
• Debt-to-Assets
• Debt-to-Equity
• CAPEX/Sales
• Return On Equity
• Return On Invested Capital
• Earnings Per Share
• Free Cash Flow Realiziation
• Price-to-earnings

I'll teach you everything here 👇
1️⃣ Gross margin (GM)

•What?
Company's gross profit compared to its revenue

• Formula?
Sales - COGS / Sales
2️⃣ EBIT Margin

•What?
What percentage of sales remains as profit before tax and interest

• Formula?
EBIT / Sales
Read 13 tweets
Compounding Quality Profile picture
Aug 3
In the end, Cash Flow is all what matters.

Here are 6 important Cash Flow Ratios: Image
1️⃣ Cash flow-to-Debt Ratio

• Indicates how long it would take a company to repay its debt if it devoted all of its cash flow to debt repayment.

• Cash Flow-to-Debt = (Total Debt / Cash Flow from Operations)

• Seek for companies with a Cash Flow-to-Debt lower than 3.
2️⃣ Operating Cash Flow Margin Ratio

• Compares a company's operating cash flow to its net revenue over a specified period.

• Operating Cash Flow Margin = (Cash Flow From Operations / Net Revenue)

• Seek for companies with an Operating Cash Flow Margin higher than 10%.
Read 9 tweets

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