Starting from zero · Course 5 of 11 · Stage 2
The standards an investor meets
Eleven notes from real 10-K filings, decoded. Inventory, PP&E, impairment, goodwill, acquisitions, leases, tax, pensions, control, currency and fair value.
A reader who can find every line on the three statements will still hit a note they cannot decode. This course is those notes.
Eleven of them, each taken from a real filing by a named company for a named fiscal year, with the filing date and accession number beside every figure. The aim is not to teach the standard. It is to let a reader open the note, see what it does to the ratios computed above it, and know whether two companies are comparable.
What each note does to a ratio
That question is the organising principle of the course, and the answer is different every time.
An inventory costing method changes gross margin and the current ratio. A useful life changes operating margin and return on assets. An impairment changes book value and every ratio built on it. A lease standard moved billions onto balance sheets in 2019 and broke ten-year comparisons at every lease-heavy company. A deferred tax judgement can make net income exceed pre-tax income. A pension discount rate values a promise decades out. Consolidation decides whose revenue appears at all.
None of these is an accounting curiosity. Each one is a reason two companies doing the same thing report different numbers.
How the examples were chosen
Every lesson uses a note a reader can open. Caterpillar for inventory and warranty, Microsoft for useful lives and for the largest software acquisition on record, Kraft Heinz for impairment, Starbucks for the lease transition, Tesla for deferred tax, Lockheed Martin for pensions, Verizon for noncontrolling interests, Coca-Cola for the equity method, currency translation and fair value.
Where the mechanics need hand-checking, a small illustrative block with round invented numbers sits beside the real note and is labelled as illustrative. The real figures are never rounded into something tidier than the filing says.
What this course is not
It is not a substitute for the standards themselves, which run to thousands of pages and are amended continuously. Each lesson cites the topic it describes so a reader can go to the current text.
It contains no view on any company and no view on any security. Every figure in it is history: a number that was filed on a date, about a fiscal year that has already ended.
Before starting
The bookkeeping course and the accrual course. A note is a description of how an entry was made, and a reader who has not made one will follow the vocabulary and not the consequence.
The tools, not the work
The standards an investor meets is 11 lessons on the arithmetic and the rules an investor has to be able to handle: the discounting, the probability, the standards, the tax. They are what you work WITH. None of them is work done on a company you own, and a tool understood is not a book checked.
Related
- The estimates inside is the previous course's last lesson, and it names five of the estimates this one takes apart properly.
- Where the 10-K footnotes are is the procedure for reading any note, including the diff against last year's version.
- Company catalogue shows every covered company with the filed statements each figure was read from.
See our methodology for how the product reads a filing and what it refuses to compute.