A company end to end

Every course before this one teaches one instrument. What none of them shows is the part that actually breaks in practice, which is the joining up. A reader who can compute each ratio separately still cannot look at ten years of one company and say which of the movements are the business and which are the accounting.

This course is that walk. One company, ten filed fiscal years, eight figures, every one of them traceable to an accession number on EDGAR.

The company is the material, not the subject

The company is Apple Inc. It was chosen for three reasons that have nothing to do with what anybody thinks of it. Ten fiscal years of every figure this course needs are on file and citable. Those ten years contain one operating change large enough to be visible as a step rather than a drift. And two of Graham's seven defensive criteria fail across almost the whole decade at a company nobody would describe as financially fragile, which is the most instructive thing a criterion can do.

Nothing in this course is a view on Apple as an investment. Not on its shares, not on its management, not on its prospects. Every sentence is past tense arithmetic on figures the company filed with the SEC. Where a lesson reaches a question it cannot settle from those figures, it stops and says so, because stopping there is the skill being taught.

The six lessons

The first prints the whole table and teaches what to do with it before explaining any of it, which is mostly a discipline about the order of operations: the questions have to be written down before the filing is opened.

The second, third and fourth each take one movement out of that table and work out what would explain it. A step in a gross margin. A return on equity that multiplies while the margin behind it barely moves. Two Graham criteria that fail comprehensively next to a decade of positive free cash flow.

The fifth is the counterweight and it is the lesson that makes the other five honest. It enumerates what ten years of accounts cannot settle, which is most of what determines whether a business keeps earning.

The sixth turns the observations into written conditions with levels attached, which is the only output of the whole exercise that survives into next year.

What this course does not do

It does not reach a conclusion about the company. It cannot: a conclusion needs a price, and the arithmetic here has no price in it anywhere.

It also does not rank the company against anything. There is exactly one market distribution in the whole course, in lesson four, and it is used to locate a threshold Graham published in 1973 inside the range of companies that exist now, rather than to locate this company inside it.

Where this sits

Last of nine courses. It runs every earlier one in order on a single company's ten filed fiscal years, so it assumes all of them and teaches no new instrument. Read it after the other eight, or read it first to see what the other eight are for and then go back.