The Microcap Minute Classroom. Module 5, chapter 4: The numbers spine: ten years in one table <div class="learn" markdown="1"> **What you will learn** - Why one year of numbers is an anecdote and ten years is an argument - The six lines that make a spine, and where each comes from - How to read Apple's ten year table and find the buyback inside it - The forensic checks that catch what the headline numbers hide - Two beginner traps: stock splits and one off charges </div> A report card for one term tells you how the term went. Ten tell you who the student is. So the deep dive builds a spine: about six lines across ten years, read as one story. The six lines: revenue, net income (profit), earnings per share or EPS (profit divided by the share count), the share count, free cash flow (cash left after running and maintaining the business), and net cash (cash and investments minus borrowings). Here is Apple's, built entirely from its 10-K filings on EDGAR. Dollars in billions except EPS. | Fiscal year | Revenue | Net income | EPS | Shares, bn | Free cash flow | Net cash | |---|---|---|---|---|---|---| | 2016 | 215.6 | 45.7 | 2.08 | 22.0 | 53.5 | 150.6 | | 2017 | 229.2 | 48.4 | 2.30 | 21.0 | 51.8 | 153.2 | | 2018 | 265.6 | 59.5 | 2.98 | 20.0 | 64.1 | 122.6 | | 2019 | 260.2 | 55.3 | 2.97 | 18.6 | 58.9 | 97.9 | | 2020 | 274.5 | 57.4 | 3.28 | 17.5 | 73.4 | 79.4 | | 2021 | 365.8 | 94.7 | 5.61 | 16.9 | 93.0 | 65.8 | | 2022 | 394.3 | 99.8 | 6.11 | 16.3 | 111.4 | 49.0 | | 2023 | 383.3 | 97.0 | 6.13 | 15.8 | 99.6 | 51.0 | | 2024 | 391.0 | 93.7 | 6.08 | 15.4 | 108.8 | 50.0 | | 2025 | 416.2 | 112.0 | 7.46 | 15.0 | 98.8 | 33.8 | Now read it like the dive does. Revenue grew 1.9 times over nine years, about 7.6% a year, and not smoothly: a 33.3% jump in 2021, a 2.8% fall in 2023. Net income grew 2.5 times, 10.5% a year. EPS grew 3.6 times, 15.2% a year. Stop there, because the gap between 10.5% and 15.2% is the whole lesson. Look at the shares column: it falls every year, 22.0 billion to 15.0 billion, down 31.8%. Apple buys its own shares and retires them, so the same profit is divided among fewer shares each year. Profit grew 10.5% a year; profit *per share* grew 15.2%, and the difference is the buyback, a board choice, not something the market did. When you see a great EPS record, check how much is business growth and how much is shrinking share count. For Apple: roughly two thirds business, one third arithmetic. Notice the free cash flow line: positive every year, never needing rescue. Then the last column of the spine: net cash fell from $153.2 billion to $33.8 billion, because Apple handed the vault to shareholders on purpose: over $855 billion of buybacks and dividends in ten years, against $813 billion of free cash flow. Notice the equity line shrinking. It frightens beginners until they learn the cause: buybacks reduce book equity by the full amount paid, so a decade of repurchases hollows it out deliberately. The spine is also where the forensic checks run, the layer most skip. Five, every time. Operating cash flow against profit over five years, and watch the direction, not the level: profit with no cash behind it is the classic warning. Receivables against revenue: growth manufactured by extending credit. The share count, which you just ran: per share growth can be borrowed rather than earned. Earnings against asset growth: doing better, or just deploying more? And where the cash went, at what price, because a buyback above what the business is worth destroys value while looking like discipline. The proxy adds a sixth: what insiders own, how directors are paid, and any related party dealings. Two traps when you build your own spine. **Splits**: Apple split its stock 4 for 1 in 2020, so older filings show pre split share counts and EPS. Our table adjusts the early years (multiply old share counts by 4) or the columns make no sense. **One off charges**: fiscal 2024 profit looks like a fall, but it includes a one time tax charge of $10.2 billion. The spine shows the bump; only the filing explains it. <div class="try" markdown="1"> **Try it yourself** Copy the last ten years of revenue, net income and free cash flow from [Apple's financials page](https://stockanalysis.com/stocks/aapl/financials/?ref=MICROCAPMINUTE); compute how many times each grew. Do the same three lines for Microsoft. Whose spine grows faster, and whose is smoother? You have just done the core move of every professional deep dive. </div> <div class="takeaways" markdown="1"> **Key takeaways** - Build the spine before any opinion: revenue, profit, EPS, shares, free cash flow, net cash, ten years deep. - EPS growth minus profit growth reveals the buyback. Apple's 15.2% against 10.5% is a third financial engineering. - The forensic checks: cash versus profit over five years, receivables versus revenue, share count, earnings versus assets, where the cash went at what price, plus the proxy's people checks. - Falling net cash beside rising profit can be a promise kept, not a problem. Read the cash flow statement before judging. - Adjust for splits, and never trust a single year's profit until you know what one offs sat inside it. </div>. I am Ritu, a synthetic voice, and the words I am reading are Ayush Agrawal's.

# The numbers spine: ten years in one table <div class="learn" markdown="1"> **What you will learn** - Why one year of numbers is an anecdote and ten years is an argument - The six lines that make a spine, and where each comes from - How to read Apple's ten year table and find the buyback inside it - The forensic checks that catch what the headline numbers hide - Two beginner traps: stock splits and one off charges </div> A report card for one term tells you how the term went. Ten tell you who the student is. So the deep dive builds a spine: about six lines across ten years, read as one story. The six lines: revenue, net income (profit), earnings per share or EPS (profit divided by the share count), the share count, free cash flow (cash left after running and maintaining the business), and net cash (cash and investments minus borrowings). Here is Apple's, built entirely from its 10-K filings on EDGAR. Dollars in billions except EPS. | Fiscal year | Revenue | Net income | EPS | Shares, bn | Free cash flow | Net cash | |---|---|---|---|---|---|---| | 2016 | 215.6 | 45.7 | 2.08 | 22.0 | 53.5 | 150.6 | | 2017 | 229.2 | 48.4 | 2.30 | 21.0 | 51.8 | 153.2 | | 2018 | 265.6 | 59.5 | 2.98 | 20.0 | 64.1 | 122.6 | | 2019 | 260.2 | 55.3 | 2.97 | 18.6 | 58.9 | 97.9 | | 2020 | 274.5 | 57.4 | 3.28 | 17.5 | 73.4 | 79.4 | | 2021 | 365.8 | 94.7 | 5.61 | 16.9 | 93.0 | 65.8 | | 2022 | 394.3 | 99.8 | 6.11 | 16.3 | 111.4 | 49.0 | | 2023 | 383.3 | 97.0 | 6.13 | 15.8 | 99.6 | 51.0 | | 2024 | 391.0 | 93.7 | 6.08 | 15.4 | 108.8 | 50.0 | | 2025 | 416.2 | 112.0 | 7.46 | 15.0 | 98.8 | 33.8 | Now read it like the dive does. Revenue grew 1.9 times over nine years, about 7.6% a year, and not smoothly: a 33.3% jump in 2021, a 2.8% fall in 2023. Net income grew 2.5 times, 10.5% a year. EPS grew 3.6 times, 15.2% a year. Stop there, because the gap between 10.5% and 15.2% is the whole lesson. Look at the shares column: it falls every year, 22.0 billion to 15.0 billion, down 31.8%. Apple buys its own shares and retires them, so the same profit is divided among fewer shares each year. Profit grew 10.5% a year; profit *per share* grew 15.2%, and the difference is the buyback, a board choice, not something the market did. When you see a great EPS record, check how much is business growth and how much is shrinking share count. For Apple: roughly two thirds business, one third arithmetic. Notice the free cash flow line: positive every year, never needing rescue. Then the last column of the spine: net cash fell from $153.2 billion to $33.8 billion, because Apple handed the vault to shareholders on purpose: over $855 billion of buybacks and dividends in ten years, against $813 billion of free cash flow. Notice the equity line shrinking. It frightens beginners until they learn the cause: buybacks reduce book equity by the full amount paid, so a decade of repurchases hollows it out deliberately. The spine is also where the forensic checks run, the layer most skip. Five, every time. Operating cash flow against profit over five years, and watch the direction, not the level: profit with no cash behind it is the classic warning. Receivables against revenue: growth manufactured by extending credit. The share count, which you just ran: per share growth can be borrowed rather than earned. Earnings against asset growth: doing better, or just deploying more? And where the cash went, at what price, because a buyback above what the business is worth destroys value while looking like discipline. The proxy adds a sixth: what insiders own, how directors are paid, and any related party dealings. Two traps when you build your own spine. **Splits**: Apple split its stock 4 for 1 in 2020, so older filings show pre split share counts and EPS. Our table adjusts the early years (multiply old share counts by 4) or the columns make no sense. **One off charges**: fiscal 2024 profit looks like a fall, but it includes a one time tax charge of $10.2 billion. The spine shows the bump; only the filing explains it. <div class="try" markdown="1"> **Try it yourself** Copy the last ten years of revenue, net income and free cash flow from [Apple's financials page](https://stockanalysis.com/stocks/aapl/financials/?ref=MICROCAPMINUTE); compute how many times each grew. Do the same three lines for Microsoft. Whose spine grows faster, and whose is smoother? You have just done the core move of every professional deep dive. </div> <div class="takeaways" markdown="1"> **Key takeaways** - Build the spine before any opinion: revenue, profit, EPS, shares, free cash flow, net cash, ten years deep. - EPS growth minus profit growth reveals the buyback. Apple's 15.2% against 10.5% is a third financial engineering. - The forensic checks: cash versus profit over five years, receivables versus revenue, share count, earnings versus assets, where the cash went at what price, plus the proxy's people checks. - Falling net cash beside rising profit can be a promise kept, not a problem. Read the cash flow statement before judging. - Adjust for splits, and never trust a single year's profit until you know what one offs sat inside it. </div>

That was chapter 4 of module 5. The text, the pictures and the exercise are on the lesson page. Thank you for listening.