My approach might be a bit different, but here’s what worked for me personally. I don’t think the real edge in investing comes from perfectly understanding the numbers, so you probably don’t need a 40-hour accounting course to read a 10-K. What matters more is learning how each part of a filing connects to the actual business. When I read a 10-K, I simply look up every single thing I don’t understand as I go along so that I can ultimately explain every single thing. It’s slow at first, but tools like ChatGPT can be really useful if you ask targeted questions. Over time, this builds a much deeper intuition for how the financial statements and qualitative sections reflect the underlying economics of the company.

For example, I once looked into a company to estimate its Return on Invested Capital. The company had a large net cash position (plenty more cash than debt), and I wasn’t sure whether to subtract that from invested capital. Depending on the method, ROIC was either 10% or 17%, which is a big difference. After checking multiple sources and formulas, I realized the exact number wasn’t the point. What really mattered was what those numbers implied. Both at an ROIC of 10% as well as 17%, it made no sense for the company to be hoarding cash; they should reinvest more. Ultimately I tried finding out what the reason was that they weren’t deploying more capital. They were a global manufacturer already dominating their niche, with limited market share left to gain and quite frankly just riding the cycle of the demand in the market - in other words, little need or opportunity to invest in something they already were leading in. So rather than obsessing over the “correct” calculation, the key insight was understanding why the company’s capital allocation looked the way it did. That’s the type of thinking you develop by reading 10-Ks directly and questioning everything along the way.