Module 11 of 11 20 min
Putting It Together
Use the six-question framework to analyze a business from start to finish.
Course lessons
Step 1
The lesson
You now have the tools to analyze any business. The six questions from the start of this course tie everything together:
- How does it make money?Business model and revenue.
- Does it keep any of it?Gross, operating, and net margins.
- What does it own and owe?Balance sheet, current ratio, debt.
- Does cash actually come in?Cash flow vs. profit.
- Why can't competitors copy it?Moats and how long they'll last.
- What could go wrong?Risks, inside and out.
No single number tells the story. A company with great margins and heavy debt can be riskier than one with modest margins and lots of cash. The skill is putting the pieces together — and being honest about what you don't know.
Step 2
See it
A hypothetical campus coffee chain: it sells drinks and a monthly subscription; has a 60% gross margin and 8% net margin; has a current ratio of 1.8 with modest debt; collects cash immediately; benefits from prime campus locations and a loyal brand; and faces risks from summer slowdowns, one landlord owning most locations, and competition from chains.
| What we found | Signal | |
|---|---|---|
| Makes money | Drinks, plus a $20/month drink subscription | Recurring revenue helps |
| Keeps it | 60% gross margin, 8% net margin | Healthy for a café |
| Owns and owes | Current ratio 1.8, modest debt | Sturdy |
| Cash | Customers pay immediately | Strong cash flow |
| Moat | Prime campus spots, loyal brand | Moderate |
| Risks | Summer slump; one landlord owns most locations | Watch concentration |
Step 3
Real-world example
Writing the one-paragraph summary
An analyst's job ends with a clear, honest summary. For Campus Coffee Co.:
Notice what the summary does: it states strengths and weaknesses, backs them with numbers, and names the single biggest risk.
Step 4
Try it: check the margins
Campus Coffee earned $1,500,000 in revenue. Try COGS of $600,000 and operating expenses of $720,000, with $60,000 in interest and taxes.
Your numbers
Direct costs of what was sold: ingredients, inventory, materials.
Running the business: wages, rent, marketing, software.
Results
Gross margin
60%
Operating margin
12%
Net margin
8%
$120,000 net profit
| Revenue | $1,500,000 |
|---|---|
| − Cost of goods sold | −$600,000 |
| Gross profit60% margin | $900,000 |
| − Operating expenses | −$720,000 |
| Operating income12% margin | $180,000 |
| − Interest and taxes | −$60,000 |
| Net profit8% margin | $120,000 |
Educational calculator, not financial advice. Results are hypothetical estimates based on the numbers you enter.
Step 5
Knowledge check
Answer each question, then check your answer to see the explanation. Retake it as many times as you like.
Question 1 of 3
Step 6
Summary
Use the six questions — model, margins, balance sheet, cash, moat, and risks — to analyze any business. No single number tells the story; the skill is combining the pieces and summarizing strengths, weaknesses, and the biggest risk honestly.
Step 7
What you should remember
- Six questions: model, margins, owns/owes, cash, moat, risks.
- No single number tells the whole story.
- Back every claim with a number.
- End with an honest one-paragraph summary.
Finished the lesson?
Mark it complete to track your progress.