The first in many posts at the Freak Investing School is a series of videos from the awesome Khan Academy.
Over the years I’ve read and studied many books on corporate finance , accounting, investing etc and yet when it comes time to explain the basics I can’t do as good of a job as these videos by Sal Khan. They are hands-down the best interactive source to learn the basics so you will have a better idea of the companies you invest your hard earned money with.
There are a total of 12 videos and while I will link each one below I will only embed the first four.
1. Price and Market Capitalization (11:55) Introduction to price and market capitalization.
2. Introduction to the Income Statement (15:27) The income statement, revenue, gross profit, operating profit, net income, ROA and ROE.
3. Earnings and EPS (10:14) Earnings, EPS (earnings per share) and how they relate to the income statement and balance sheet.
4. Introduction to the Price-to-Earnings Ratio (14:47) Price to Earnings Ration (or P/E ratio).
– If you were able to get through the first four videos and understood the concepts Congrats!-
Below are more videos to further enhance your learning so you can invest smarter.
- P/E Discussion (15:34) Discussion of the price-to-earnings ratio.
- ROA Discussion 1 (10:31) & ROA Discussion 2 (10:17) The various ways to measure return on assets.
- Depreciation (12:33) Depreciation a capital asset
- Amortization (7:45) Introduction to amortization
- P/E Conundrum (13:41) A situation where the price to earnings ratio seems to not fairly price an asset.
- Enterprise Value (17:29) Solving the P/E conundrum by looking at Enterprise Value
- EBITDA (14:07) Review of Enterprise Value (EV) and comparing it to EBITDA
This should hopefully give you a better idea about the basics of investing (mostly fundamentals). As a fun fact if you watched all of the videos like I did you have watched nearly 2.5 hours worth of material, keep it up and soon you will be very comfortable doing your own research and investing.