Course Content
Introduction
The stock market is a marketplace where shares of publicly listed companies are bought and sold. It plays a central role in the modern economy, acting as a bridge between businesses that need capital and investors who have money to invest. The origins of the stock market trace back to the early 1600s, when the Dutch East India Company issued the first shares on the Amsterdam Stock Exchange. This allowed the company to raise money from the public to fund its trade ventures, in return for a share of the profits. Over time, this concept evolved, and today, stock markets exist all over the world, with major exchanges like the New York Stock Exchange (NYSE), NASDAQ, and London Stock Exchange facilitating trillions of dollars in trade. At its core, the stock market enables businesses to grow. By offering shares to the public through a process called an Initial Public Offering (IPO), companies can raise large amounts of money to expand operations, invest in research, or develop new products—without having to rely solely on banks or private lenders. In return, investors get the opportunity to share in the company’s success through rising share prices and dividends. Investing in the stock market can be a powerful way to build wealth over time. Wise investments in strong companies can generate solid returns, especially when held for the long term. Many individuals have grown their savings substantially by investing in companies that have thrived. However, it’s important to remember that the stock market carries risks. Prices can go up, but they can also go down—sometimes sharply. Economic downturns, company mismanagement, or shifts in the global market can all lead to losses. For beginners, it's essential to approach investing with caution, avoid chasing “get rich quick” schemes, and take the time to understand what you're investing in. In short, the stock market is a powerful tool for economic growth and personal financial development—but like all tools, it must be used wisely.
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Introduction
Stock Markets Around The World
Listing On A Stock Market
How Stocks are Bought and Sold
Trade Date vs Settlement Date, What is T + 2?
What Is A Stock Market Index?
ETF’s and Index Funds
Fundamental Analysis
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Fundamental Analysis Introduction
Understanding Revenue and Profit
Earnings Per Share and PE Ratio
Understanding the Balance Sheet
Understanding Cashflow
Dividends – How Investors Earn Income From Their Shares
What Causes Stock Prices To Rise And Fall
Understanding Market Capitalization
Technical Analysis
Along with Fundamental Analysis, Investors increasingly rely on Technical Analysis to decide whether to buy or sell a stock. Here we will explore the main techniques.
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Introduction to Technical Analysis
How To Read A Price Chart – The Basics
Understanding Support and Resistance Levels
Identifying Trends and Drawing Trendlines
Understanding Moving Averages
Introduction to Momentum Indicators
Chart Patterns – Spotting Setups in the Market
Volume – The Power Behind a Price Movement
Investing Safely and Profitably
How do professionals invest safely and profitably? Some key concepts such as position sizing and stop losses.
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How To Place Trades And Manage Risk
Using A Trailing Stop To Protect Profits and Limit Loss
Diversification and Portfolio Management
Taking Profits
Common Investor Mistakes And How To Avoid Them
A Quick Word On Taxes
Summary and Beginner’s Checklist
10 Must Read Books for Investors and Traders
Beginners guide to investing in the Stock Market

Understanding the Balance Sheet

 

The balance sheet is one of the three main financial statements used in fundamental analysis. It gives a snapshot of a company’s financial position at a specific point in time — showing what it owns, what it owes, and what’s left for the owners (shareholders).

 

 

What Is a Balance Sheet?

 

The balance sheet is based on a simple formula:

Assets – Liabilities = Net Assets (Equity)

 

It tells you:

  • How strong or weak a company’s finances are

  • Whether it’s carrying too much debt

  • How much value the company really holds

 

 

1. Assets – What the Company Owns

 

Assets are valuable things the company owns or controls, such as:

  • Cash

  • Inventory (products it plans to sell)

  • Property, equipment, and buildings

  • Investments

  • Accounts receivable (money owed to the company)

 

Example:
A company with $5 million in cash, $10 million in property, and $3 million in inventory has $18 million in assets.

 

 

2. Liabilities – What the Company Owes

 

Liabilities are the company’s financial obligations — money it owes to others, such as:

  • Loans and debt

  • Unpaid bills

  • Wages and taxes owed

  • Accounts payable (money the company owes to suppliers)

 

Example:
If a company owes $4 million on a loan and $1 million to suppliers, its liabilities = $5 million.

 

 

3. Shareholders’ Equity (Net Assets)

 

Also called Net Assets or Book Value, this is what’s left over for shareholders if the company paid off all its debts.

 

Formula:
Shareholders’ Equity = Assets – Liabilities

 

This represents:

  • The net worth of the company

  • The value that technically “belongs” to the shareholders

  • Also includes retained earnings (profits kept in the business)

 

Example:
If a company has $18 million in assets and $5 million in liabilities,
Equity = $13 million

 

 

Understanding Debt in Fundamental Analysis

 

Debt is a key part of the balance sheet — and too much of it can be a red flag.

 

Things to consider:

  • Debt-to-Equity Ratio = Total Debt ÷ Shareholders’ Equity
    A high ratio could mean the company is over-leveraged (relying too much on borrowed money).

  • Interest Payments: Can the company comfortably pay interest on its loans?

  • Debt Maturity: Are loans due soon, or is repayment spread out?

  • Cash Reserves: Does the company have enough cash to cover short-term debts?

 

 

Why It Matters

 

  • A strong balance sheet means the company can survive tough times.

  • Too much debt makes a company vulnerable if profits fall or interest rates rise.

  • Investors prefer companies with a healthy balance of assets and manageable debt.

 

The balance sheet shows what a company owns (assets), owes (liabilities), and what’s left for shareholders (equity). It helps investors judge the financial strength of a company. Keeping an eye on debt levels and net assets is essential when deciding whether a business is financially healthy and a safe investment.

 

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Stock Market Course