A Practical Curriculum Blueprint for Economics, Business and Finance

Part 1. Developing an Eye for Companies

Goal: Know what to examine first within 5 minutes of looking at a company

1. A Map of Company Analysis

• Why a good company and a good stock are different
• 4 factors that determine a share price: Earnings × Growth × Valuation × Expectations
• Connecting revenue → profit → cash → company value
• The first 10 numbers to examine when analyzing a company

2. Does This Company Make Money Well?

• Revenue
• Gross Profit
• Operating income
• Net income
• Gross Margin / Operating Margin
• YoY and QoQ growth
• Breaking down price, sales volume and product mix

3. Are the Earnings High Quality?

• Operating income vs. net income
• One-time gains
• Adjusted / Non-GAAP earnings
• Distinguishing accounting profits from actual business performance

In practice: Examine a company's latest 8 quarters of results to judge whether the business is improving

Part 2. Are Profits Really Cash?

4. Why Is There No Cash Despite Positive Net Income?

• An intuitive reading of the cash flow statement
• OCF
• Accounts Receivable
• Inventory
• Accounts Payable
• Customer advances / contract liabilities

5. Why Does FCF Matter?

• OCF − CapEx
• Maintenance CapEx vs. growth CapEx
• FCF Margin
• FCF Conversion

6. Warning Signs About Earnings Quality

• Net income ↑ / OCF ↓
• Revenue ↑ / Inventory ↑↑
• Revenue ↑ / Accounts receivable ↑↑
• EBITDA↑ / FCF↓
• FCF supported by stock-based compensation

In practice:
Find companies whose net income looks good but whose underlying performance does not

Part 3. Financial Strength and Survival

7. How Much Does This Company Owe?

• Cash
• Total Debt
• Net Debt
• Net Debt / EBITDA

8. Where Do Risks Emerge First When Interest Rates Rise?

• Interest Expense
• Fixed rates vs. floating rates
• Debt maturities
• Refinancing
• Interest Coverage Ratio

9. Finding Warning Signs on the Balance Sheet

• Inventory
• Accounts Receivable
• Goodwill
• Intangible Assets
• Provisions
• Contingent Liabilities

10. Finding Companies That Can Survive

• Liquidity
• FCF and debt repayment
• Cash burn rate
• Potential equity issuance
• Credit Rating

In practice:
Compare two companies in the same industry Assess which can better withstand a recession

Part 4. Is Management Spending Money Well?

This is where concepts such as ROIC enter naturally.

11. How Much Do You Earn on KRW 1 Trillion of Investment?

• The intuition behind ROIC
• NOPAT
• Invested Capital
• Breaking down ROIC

12. Does Growth Make a Company Good?

• Growth rate vs. capital invested
• Incremental ROIC
• Growth that burns through cash
• Capital-efficient growth

13. Management's Capital Allocation

Where does a company spend the money it earns?

1. CapEx
2. R&D
3. M&A
4. Debt Repayment
5. Dividends
6. Share Repurchases

14. Good Share Repurchases vs. Bad Share Repurchases

• Buying undervalued shares
• Buying overvalued shares
• Offsetting dilution from SBC
• Debt-financed share repurchases

15. Does M&A Create Value?

• Acquisition Price
• Goodwill
• Synergies
• ROIC
• Impairment Losses

In practice:
Ask: “Would I entrust another KRW 10 billion in cash to this management team?”

Part 5. So, What Is This Company Worth?

This is where we study P/E, DCF and related concepts. We do not start with the formulas.

16. Is a P/E of 10× Cheap?

• What P/E really means
• Forward vs Trailing
• Growth and P/E
• The P/E trap in cyclical stocks

17. When Is P/B Useful?

• Book Value
• ROE
• Financial Stocks
• Asset Value

18. Why Use EV/EBITDA?

• Market capitalization vs. EV
• Comparing companies with different levels of debt
• The pitfalls of EBITDA

19. FCF Yield

• How much cash would I receive if I bought the entire business?
• Normalized FCF
• FCF yield vs. interest rates

20. Relative Valuation

• Peer Comparisons
• Historical Valuations
• Appropriate multiples by industry
• Multiple re-rating / de-rating

Part 6. Understanding DCF in an Investor's Language

Combine what we have learned so far, and DCF follows naturally.

21. Company Value Is Ultimately the Sum of Future Cash Flows

• The intuition behind present value
• What the discount rate means
• Why future money is worth less than money today

22. WACC

• “What minimum percentage return would I require to invest in this company?”
• Interest Rates
• Equity Risk Premium
• Beta
• Cost of Debt

23. Building a DCF

• Revenue
• Margins
• Taxes
• CapEx
• Working Capital
• FCFF

24. Terminal Value

• The company's distant future
• Perpetual Growth Rate
• Exit Multiple
• The risk of a DCF dominated by terminal value

25. EV → Equity Value → Per-Share Value

• Net Debt
• Non-Controlling Interests
• Non-Operating Assets
• Diluted Share Count

26. Reverse DCF

We plan to place particular emphasis on this topic.

“How much must this company grow to justify its current share price?”

This is much more practical than simply naming a target share price.

27. Bear / Base / Bull

• Growth Rate
• Margins
• CapEx
• WACC
• Valuation
• Probability-Weighted Value

Part 7. Why Do Stock Prices Move Differently from Earnings?

Here, we move from Company analysis → Stock investing in our learning journey.

28. Why Does a Stock Fall Despite Strong Earnings?

Key formula:

Share price = Actual results − The market's prior expectations

• Beat / Miss
• Whisper number
• Guidance
• Changes in consensus estimates

29. Earnings Revision

• Upward EPS estimate revisions
• Upward FCF estimate revisions
• Changes in target prices
• Earnings Momentum

30. Catalysts That Move Share Prices

• Earnings
• New Products
• Price Increases
• Orders Won
• Regulation
• M&A
• Treasury Shares
• Interest Rates

31. What Do Charts Show?

Instead of treating the chart itself as a prediction tool, regard it as a record of market behavior to interpret.

• Trends
• Support and Resistance
• Moving Averages
• Breakout
• Gap

32. Trading Volume

• Price + Volume
• Volume during price advances
• Accumulation and Distribution
• Event-Driven Volume

33. Investor Flows

Korea:

• Foreign Investors
• Institutional Investors
• Retail Investors
• Program Trading

United States:

• Institutional Investors
• ETF
• Options
• Short interest

Part 8. Connecting Macroeconomics to Companies

Rather than memorizing economics in isolation, we study the channels through which it affects company earnings to understand it in context.

34. The Business Cycle

\[ \text{Business cycle} \rightarrow \text{Demand} \rightarrow \text{Revenue} \rightarrow \text{Profit} \rightarrow \text{Share price} \]

35. Inflation

• CPI/PPI
• Raw Material Costs
• Pricing Power
• Margins

36. Interest Rates

\[ \text{Interest rates} \rightarrow \text{Interest expense} \]

And

\[ \text{Interest rates} \rightarrow WACC \rightarrow Valuation \]

37. Exchange Rates

• Exporters
• Importers
• Translation vs Transaction

38. Liquidity and the Stock Market

• Central Banks
• Financial Conditions
• Risk Appetite
• Multiples

39. How to Analyze Cyclical Stocks

• Semiconductors
• Automobiles
• Chemicals
• Steel
• Shipping

In practice:
“Through which channels would a 50 bp rise in interest rates affect this company's share price?”

Part 9. Reading Company Filings Yourself

Here, instead of studying filings as a separate academic subject, we learn by examining real companies together in practice.

40. Reading Korea's DART Filings in 10 Minutes

What to look at first, in order:

1. Revenue
2. Operating income
3. OCF
4. CapEx
5. Cash
6. Borrowings
7. Inventory
8. Guidance / Business Developments

41. Key Notes to the Annual Report

• Revenue
• Inventory
• Property, Plant and Equipment
• Borrowings
• Contingent Liabilities
• Affiliated Companies

42. Reading a US 10-Q in 10 Minutes

• Income Statement
• Balance Sheet
• Cash Flow
• MD&A

43. Reading a 10-K Thoroughly

• Business
• Risk Factors
• Financials
• Notes

44. Earnings Release vs 10-Q vs Conference Call

What appears first, and where

45. Reading Conference Calls

Particularly important phrases:

• demand
• pricing
• utilization
• mix
• backlog
• visibility
• CapEx
• margin
• guidance

Part 10. Analyzing One Company from Start to Finish

Here, we put everything we have learned into practice.

46. A 5-Minute Company Screen

47. Understanding the Business Model

48. Financial Trends over the Latest 8–20 Quarters

49. Comparing Competitors

50. ROIC, FCF and Financial Soundness

51. Growth Drivers

52. Risks

53. Valuation

• PER
• EV/EBITDA
• FCF Yield
• DCF

54. Catalyst

55. Bear / Base / Bull

56. The Final Investment Case

The final output should ultimately fit on one page in total.

The structure in condensed form

Level 1 — Money

Revenue → Profit → Cash

Level 2 — Financial Strength

Cash → Debt → FCF → Survival

Level 3 — Management

CapEx → ROIC → Capital allocation

Level 4 — Price

PER → EV/EBITDA → FCF Yield → DCF

Level 5 — Markets

Earnings expectations → Catalysts → Charts → Volume → Investor flows

Level 6 — Environment

Business cycle → Inflation → Interest rates → Exchange rates → Company earnings

Level 7 — Practice

Filings → Modeling → Valuation → Investment case

The Complete Blueprint

Phase 1. Companies and Stocks

Day 1 to approximately 55

This is the course outlined above.

How companies make money → Financial statements → FCF → ROIC → Valuation → Share prices → Filings → Practical company analysis

By the end, you should at least be able to assess questions like this:

“SK hynix's earnings are improving, but how much of that improvement is reflected in the current price?”

Phase 2. Reading the Economy

Part 11. The Basic Workings of the Economy

The Essential Economics Needed to Understand Economic News

57. What Is GDP, Ultimately?

• Nominal GDP / Real GDP
• Consumption, investment, government spending and net exports
• Sources of economic growth

58. The Business Cycle

• Expansion
• Overheating
• Slowdown
• Recession
• Recovery

59. Applying Supply and Demand to the Real Economy

• Price
• Production Volume
• Supply Shocks
• Demand Shocks

60. Productivity

• Labor
• Capital
• Technology
• TFP
• The key to long-term economic growth

61. Potential Growth and the Output Gap

• Whether the economy is overheating or in recession

62. Leading, Coincident and Lagging Economic Indicators

• PMI
• ISM
• Industrial Production
• Retail Sales
• Employment
• Unemployment Rate

Part 12. Inflation

63. Why Does Inflation Occur?

• Demand-Pull Inflation
• Cost-Push Inflation
• Money
• Supply Shocks

64. Reading CPI Properly

• Headline
• Core
• Goods
• Services
• Shelter Costs

65. PPI·PCE·GDP Deflator

Why price measures differ

66. Wages and Prices

\[ \text{Wages} \rightarrow \text{Services inflation} \rightarrow \text{Core inflation} \]

67. Inflation Expectations

• BEI
• Consumer Expectations
• Wage Negotiations

68. Disinflation vs. Deflation

Part 13. Central Banks and Interest Rates

This topic deserves substantial attention.

69. What Is an Interest Rate the Price Of?

The time price of money

70. Policy Interest Rates

• Fed Funds Rate
• Korea's Base Rate

71. Why Do Central Banks Raise and Lower Interest Rates?

\[ \text{Interest rates} \rightarrow \text{Lending} \rightarrow \text{Consumption and investment} \rightarrow \text{Demand} \rightarrow \text{Inflation} \]

72. Real Interest Rates

\[ \text{Real interest rate} \approx \text{Nominal interest rate} - \text{Expected inflation} \]

73. The Neutral Interest Rate \(r^*\)

• The rate that neither stimulates nor restrains the economy

74. Monetary Policy Lags

75. QE / QT

• Central Bank Balance Sheets
• Liquidity
• Long-Term Interest Rates

76. How to Read the Fed in Practice

• FOMC
• Dot Plot
• SEP
• Press Conferences
• Minutes

From here, economic news begins to look quite different.

Phase 3. Reading Financial Markets

Part 14. Bonds

To understand stocks properly, you must understand bonds.

77. The Basic Structure of a Bond

• Face Value
• Coupon
• Maturity
• Market Price
• Yield

78. Interest Rates and Bond Prices

There is one key point.

Interest rates ↑ → Existing bond prices ↓

Understand why through numerical examples.

79. Yield to Maturity

80. Duration

• How sensitive it is to interest rates

81. Convexity

82. The Structure of Government Bond Yields

• 2Y
• 5Y
• 10Y
• 30Y

83. Yield Curve

\[ 10Y-2Y \]

\[ 10Y-3M \]

84. An Inverted Yield Curve

Why it can signal a recession

85. Breaking Down Interest Rates

Long-term rates are approximately

\[ \text{Long-term interest rate} = \text{Expected short-term rates} + \text{Term premium} \]

86. Real Interest Rates and BEI

• Nominal Interest Rates
• TIPS
• Expected Inflation

87. Corporate Bonds

• Credit Spread
• IG
• HY

88. Reading the Business Cycle Through Credit Spreads

Wider spreads = The market assigns greater credit risk

Part 15. Exchange Rates

This area is also essential.

89. Exchange Rate Basics

What exactly does USD/KRW at 1,400 mean?

90. Why Do Exchange Rates Move?

Broadly speaking:

• Interest Rate Differentials
• Growth Rate
• Inflation
• Capital Flows
• Trade Balance
• Risk Appetite

91. Interest Rate Differentials and Exchange Rates

\[ \text{US interest rates} \uparrow \rightarrow \text{Appeal of dollar assets} \uparrow \rightarrow \text{Demand for dollars} \uparrow \]

In reality, however, this alone does not explain exchange rates.

92. Purchasing Power Parity

93. Interest Rate Parity

94. Dollar Index

• DXY
• Dollar Strength / Weakness

95. Why Does the Korean Won Behave Like a Risk Asset?

96. The Yen and the Yuan

• BOJ
• China's Business Cycle
• Capital Controls

97. Exchange Rates and Corporate Earnings

• Exporters
• Importers
• Translation
• Transaction

Part 16. Banks and Credit

This is essential to understanding events such as the 2008 crisis.

98. How Do Banks Make Money?

• Deposits
• Loans
• NIM

99. A Bank's Balance Sheet

100. How Do Deposits and Loans Create Money?

101. The Relationship Between Central Banks and Commercial Banks

102. Credit Cycle

\[ \text{Credit expansion} \rightarrow \text{Higher investment and consumption} \rightarrow \text{Rising asset prices} \]

Conversely,

\[ \text{Credit contraction} \rightarrow \text{Deleveraging} \rightarrow \text{Economic slowdown} \]

103. Delinquency Rates, Non-Performing Loans and Loan-Loss Allowances

104. Bank Runs and Liquidity Crises

105. Why Do Financial Crises Recur?

• Leverage
• Maturity mismatch
• Liquidity mismatch
• Collateral

Part 17. Real Estate

Real estate should also be studied as an asset connected to interest rates and credit, rather than in isolation.

106. What Determines Real Estate Prices?

\[ \text{Price} \approx \text{Income / Rent} + \text{Interest rates} + \text{Lending} + \text{Supply} + \text{Expectations} \]

107. Cap Rate

\[ Cap\ Rate = NOI/\text{Property price} \]

108. How Interest Rates Affect Housing Prices

109. Mortgage Structure

110. LTV / DTI / DSR

111. Housing Supply

• Permits
• Construction Starts
• Completions

112. Jeonse and Monthly Rent Structures

A structure specific to the Korean market

113. PF

114. Commercial Real Estate

• Office
• Retail
• Logistics
• Data Center

115. REITs

Part 18. Commodities

116. Crude Oil

• Supply and Demand
• OPEC+
• Inventory
• Geopolitics

117. Natural Gas

118. Gold

Gold is not simply an inflation asset.

In particular:

\[ \text{Real interest rates} \]

and

\[ \text{The dollar} \]

have a substantial influence.

119. Copper

• The Business Cycle
• China
• Power Grids
• AI DC

120. Agricultural Commodities

121. Commodity Cycle

Part 19. Economic Policy

Fiscal Policy

122. Government Spending and Taxes

123. Fiscal Deficits

\[ \text{Government spending} - \text{Tax revenue} \]

124. Government Debt

125. How Government Bond Issuance Affects Markets

126. Crowding Out

127. Fiscal Policy and Inflation

128. Monetary Policy vs. Fiscal Policy

Economic news is difficult to understand without distinguishing the two.

Part 20. International Economics

129. The Trade Balance and Current Account

130. The Capital Account

131. The Balance of Payments

132. Tariffs

133. Trade Wars

134. Supply Chains

135. China's Economy

• Real Estate
• Local Governments
• Manufacturing
• Exports

136. The Structure of the US Economy

137. The Structure of the Korean Economy

In particular:

• Exports
• Semiconductors
• China
• Household Debt
• Real Estate

Phase 4. Connecting the Markets

This is the final stage.

Part 21. Cross-Asset

138. Stocks and Bonds

139. Bonds and Exchange Rates

140. The Dollar and Commodities

141. Interest Rates and Real Estate

142. Interest Rates and Growth Stocks

143. Credit Spreads and the Stock Market

144. The Yield Curve and the Business Cycle

At this stage, we do not view each in isolation.

For example:

The US 10-year Treasury yield rises from 4.0% → 4.7%

Then we examine the effects together.

\[ 10Y↑ \]

→ DCF discount rate ↑
→ Growth stock valuations ↓

At the same time,

→ Mortgage Rate ↑
→ Housing demand ↓

At the same time,

→ Potential dollar strength ↑
→ Downward pressure on the Korean won

At the same time,

→ Corporate bond funding costs ↑
→ Companies' CapEx burden ↑

This is how we connect the effects.

Part 22. Assessing the Market Regime

145. Growth ↑ / Inflation ↓

146. Growth ↑ / Inflation ↑

147. Growth ↓ / Inflation ↑

148. Growth ↓ / Inflation ↓

In each environment, examine how

• Stocks
• Bonds
• The Dollar
• Gold
• Crude Oil
• Real Estate

respond.

Part 23. Economic Indicators in Practice

Rather than simply memorizing the numbers released each month, study the sequence of market reactions to understand it in context.

149. Reading a CPI Release

150. The Employment Report

• NFP
• Unemployment Rate
• Wages

151. ISM / PMI

152. Retail Sales

153. GDP

154. PCE

155. JOLTS

156. Housing Indicators

157. Conference Board / Consumer Sentiment

Always read each indicator in this order:

Actual → Consensus → Previous → Revised → Interest rate reaction → Dollar → Stocks

when assessing the release.

Part 24. Putting It All Together

By the end, you should be able to answer questions like this yourself.

US CPI came in above expectations.
Yet the 10-year Treasury yield fell.
The dollar also weakened.
The Nasdaq rose.
Why?

This is the stage at which we move beyond simplistic,

“CPI up = Stocks down”

mechanical analysis.

Ultimately:

\[ \text{Economy} \rightarrow \text{Central banks} \rightarrow \text{Interest rates} \rightarrow \text{Bonds} \rightarrow \text{Exchange rates} \rightarrow \text{Liquidity} \rightarrow \text{Company earnings} \rightarrow \text{Valuation} \rightarrow \text{Share prices} \]

The goal is to see this as a single system.

The overall curriculum would look roughly like this

In other words, a curriculum of approximately 150–170 lessons can provide a solid grounding across economics, business, finance and markets.