Decode the balance sheet
Cash, debt, working capital, and whether the company has options in a bad year. · 10 min
What it owns and owes
Assets are resources. Liabilities are claims. Equity is the residual. A strong balance sheet is optionality: the company can invest through a downturn instead of raising expensive capital.
Debt is not automatically evil
Debt against a stable cash engine can be fine. Debt against a cyclical, low-margin, or unproven model is how good stories die. Look at cash, interest coverage, and whether free cash flow can actually service the stack.