Module 1 of 8 in Fundamental analysis
Understanding the business
How a company makes money, the industry it competes in, what protects it from rivals, and why some businesses are cyclical or capital hungry.
5 lessons in this module. Progress is saved in your browser as you go.
Numbers describe a business; they do not explain it. This module starts with the questions an analyst asks before opening a spreadsheet: what the company sells, who pays for it, who it competes with, and what, if anything, stops a competitor from taking its customers.
By the end of this module you should be able to
- Describe a company's business model, revenue sources, customers, suppliers and distribution.
- Analyse an industry's structure, barriers to entry and bargaining power.
- Identify sources of competitive advantage and explain why they can weaken.
- Explain cyclicality, capital intensity and operating leverage and how they affect profit.
Lessons in order
Module test
10 questions, chosen at random from a bank of 32 questions and balanced across this module's learning goals and difficulty levels. Every question comes with an explanation. You need 80% to pass, and you can retake it as often as you like with a fresh set of questions.
This module builds on
- Revenue, expenses and profit: A business model is the story behind the revenue and costs that lesson explains.
- Depreciation, amortisation and capital expenditure: Capital-intensive businesses carry large depreciation charges, which that lesson explains.
- Profit margins and what they reveal: Operating leverage explains why operating margin rises and falls with revenue.