Accounting

The three statements, how they link, and the questions every interviewer asks.

1
The income statement, line by line
Revenue down to net income, one layer of cost at a time. What each subtotal means, why interest and taxes sit below operating income, and the margins interviewers actually ask about.
6 min read
2
The balance sheet, both sides
The balance sheet is a point-in-time snapshot of what a company owns and how it paid for it. Assets always equal liabilities plus equity, and knowing why is your check on every accounting answer.
6 min read
3
The cash flow statement, section by section
The cash flow statement reconciles accrual net income back to real cash across three sections (operating, investing, financing). This is how it's built and why profit is not the same as cash.
6 min read
4
Walk me through the three statements
What each of the three statements actually is, the subsections inside them, how they link, and the $10 depreciation walk interviewers use to test whether you really get it.
7 min read
5
Depreciation goes up by $20... (Advanced)
The most-asked technical on the Street, and a harder filter than the three-statement walk itself. The fixed order, the tax shield that makes cash rise, why it balances (net income drives retained earnings), and the two questions that solve any version of it.
15 min read
6
Depreciation and amortization
Depreciation and amortization spread the cost of long-lived assets over their useful life. Both are non-cash, both get added back on the cash flow statement, and the only real cash they move is the tax they save.
5 min read
7
Working capital, and why it eats cash
Working capital is the cash tied up in running the business day to day. When it grows, it drains cash and free cash flow, which is why fast-growing companies can be starved for cash even while profits look great.
7 min read
8
EBITDA and the bridge to free cash flow
What EBITDA actually is, why bankers lean on it, and the exact bridge from EBITDA to unlevered free cash flow. EBITDA is not cash. Capex, taxes, and working capital are the gap.
6 min read
9
Deferred revenue
Cash collected before you deliver the product is a liability, not revenue. Here's how deferred revenue works, why it never touches the income statement until earned, and why investors love the businesses that carry a lot of it.
6 min read
10
Deferred taxes: DTAs and DTLs
Deferred taxes exist because a company keeps two sets of books, one for shareholders and one for the IRS. DTLs mean you will pay more cash tax later; DTAs mean you will pay less. Here is the timing logic and how each unwinds.
6 min read
11
Goodwill and purchase accounting
When a buyer pays more than the fair value of the identifiable net assets it acquires, the excess lands on the balance sheet as goodwill. Here is how purchase accounting actually works, why asset write-ups create a deferred tax liability, and why goodwill is tested for impairment, not amortized.
6 min read
12
Stock-based compensation
SBC is a real expense that reduces net income but burns no cash, so it gets added back on the cash flow statement. The catch is the dilution.
6 min read
13
Diluted shares and the treasury stock method
A company's share count is not one number. Basic vs diluted shares, where dilution comes from, and the treasury stock method worked step by step with clean numbers, plus why diluted shares are the count that drives equity value and EPS.
5 min read
14
Dividends and buybacks
The two ways a company hands cash back to shareholders. Dividends pay a steady amount per share; buybacks shrink the share count and lift EPS. Why neither creates value on its own, worked with clean numbers.
5 min read
15
Operating leverage
Operating leverage is how much of a company's cost base is fixed. High fixed costs mean a small revenue move produces a large profit move, up or down. Contribution margin, flow-through, and break-even explained.
5 min read