How to analyze any company like an investor?

All infographics from this video are available to download for Research tier members. Follow me on LinkedIn: https://www.linkedin.com/in/leo-cui-ph-d-cfa-59531439/ I am a venture capital investor at FoundersX Ventures, an AI and deep-tech VC fund based in Menlo Park, Cambridge and NYC. I previously did my Ph.D. at Harvard, postdoc at MIT. 📥 GET THE INFOGRAPHICS & PRESENTATION All infographics from this video are available to download for Research tier members — plus members can propose my next research topics and watch every video in advance, ad-free. --- Harbor Coffee reports $50 million of profit. During the same year, its cash balance increases by only $20 million. Both numbers are correct. If you've ever wondered how a company can be profitable and still run out of money — or how a business with modest reported profit can be generating cash hand over fist — the answer is in the gap between those two numbers. And once you can read it, you can read almost any annual report. In under 20 minutes, I walk through all three financial statements using one simple, fictional company. The income statement measures profit. The balance sheet shows what the business has and owes. The cash flow statement explains what actually happened to the money. Then we connect all three, line by line, and solve the $50 million versus $20 million mystery we opened with. No accounting background required. You'll learn: - The three questions each statement answers — and why the balance sheet is a snapshot while the other two cover a period - How revenue becomes profit: cost of sales, gross profit, operating expenses, operating income, net income - Why depreciation reduces profit without any cash leaving the business — and why it appears on all three statements - Assets, liabilities and equity — and why the balance sheet actually balances (it isn't a trick) - Why equity is not the company's cash, and not what the market thinks it's worth - The indirect method: how net income gets converted into operating cash flow - Working capital explained simply — receivables, inventory, and why rising assets can consume cash - CapEx, free cash flow, and how analysts calculate it - The six connections that link the three statements into one story - The comparison worth memorizing: operating cash flow vs. net income - Red flags: revenue up 10% while receivables climb 40%, and profit that never becomes cash - How to read a real annual report, in the right order ⏱️ CHAPTERS 0:00 Cold Open — Profit Is Not Cash 0:55 Meet Harbor Coffee 1:18 Ch 1 — Three Statements, Three Questions 1:41 Ch 2 — How Sales Become Profit 2:53 — Depreciation Explained 3:37 — Operating Income to Net Income 4:47 Ch 3 — What Harbor Has and Owes (The Balance Sheet) 5:46 — Liabilities and Equity 6:18 — Why the Balance Sheet Balances 7:17 Ch 4 — Why Profit and Cash Are Different 7:49 — Adding Back Depreciation 8:24 — Working Capital 10:04 — CapEx and Free Cash Flow 10:46 — Financing Activities 11:17 — Solving the $50M vs $20M Mystery 12:31 Ch 5 — The Six Connections 13:55 Ch 6 — Reading a Real Company 14:24 — Red Flags to Watch For 15:17 — Why Bank Statements Look Different 15:37 Conclusion — Three Statements, One Business This video is part of my Watch Before Investing series, where I break down complicated financial and technology topics for viewers without a specialist background. Disclaimer: Nothing in this video is financial advice. I am a venture capital investor. Harbor Coffee is a fictional, deliberately simplified company used for teaching — real financial statements contain more line items and more variation than this example. This video is for education and reflects my own analysis. Always conduct your own research and never invest money you cannot afford to lose. The infographics and images in this video were created with the assistance of AI tools. While every effort was made to verify their accuracy, they may contain errors. If you spot one, please let me know in the comments — corrections will be pinned. Subscribe for more deep dives into investing, financial analysis, semiconductors, AI infrastructure, and the companies building the next generation of computing. #FinancialStatements #Investing #Accounting #CashFlow #BalanceSheet #IncomeStatement #FinancialLiteracy #StockMarket #WatchBeforeInvesting