The Ratio Toolkit — Putting It Together
Your systematic analysis workflow
The five preceding lessons in m5 — profitability, returns, leverage, efficiency/growth, free cash flow — describe the financial side of company analysis. This lesson synthesizes them into a working workflow you can apply to any stock. The discipline of running this five-step check before any valuation work catches 90%+ of value traps and surfaces the rare combinations of quality, financial health, and cash generation that distinguish wonderful businesses from merely profitable ones.
Companies that pass all five checks deserve deeper valuation work; companies that fail two or more usually don't. The professional analyst's five-step ratio workflow. Step 1: Profitability.
Are gross/operating/net margins above industry medians? Are they trending up or down over 5-10 years? Step 2: Returns on capital.
Is ROIC above WACC by a durable margin? Has ROIC been sustained for 5+ years (suggesting moat) or is it mean-reverting?
That is the opening. Finishing a lesson is where it stops being interesting and starts being useful: the full lesson runs to 4 sections and ends with 3 practice questions. A free account is what opens the rest, and the other 255 lessons in the Academy with it. No card.
What this lesson covers
- 1The one-minute screen — quick filter for further research
- 2A worked example — applying the five-step workflow to NVDA FY2025
- 3Where to see this on the platform
- 4Summary