Chapter 4 of 4

Write a research memo someone can challenge

Turn documents and calculations into a clear educational research note with assumptions, scenarios and a useful review process.

2 min read · Original educational chapter

In this chapter

Lead with the question and mechanism
Build a source trail
Present competing scenarios
Make the next review specific
Worked example
Common mistakes
Check your understanding
Desk assignment

Lead with the question and mechanism #

A useful memo starts with what is being investigated and why the answer matters. Explain the business in ordinary language before introducing ratios. If a reader cannot say who pays the company and why, a valuation table is premature.

Separate what is observed from what is forecast. A claim such as better margins next year needs a bridge through price, volume, costs, utilisation or mix. Name the assumption rather than hiding it in an unexplained growth percentage.

Build a source trail #

For every material number record the original document, period, page or table, units and publication date. Prefer filed results and notes for accounting facts; use management presentations as an additional view.

Reconcile differences between standalone and consolidated accounts and between reported and adjusted metrics. If a metric is not available, mark it unknown. Do not invent a number because a spreadsheet cell expects one.

Present competing scenarios #

Show a base case, a plausible adverse case and a case in which the thesis is stronger. Keep the accounting identities and funding constraints consistent across them. Sensitivity is a calculation; probability needs a separate justification.

Explain the variables that drive value and the observations that would change the conclusion. A range should reflect uncertainty in the inputs, not merely a decorative plus/minus percentage around the preferred answer.

Make the next review specific #

Finish with unresolved questions and the next observable trigger: a capacity ramp, collection trend, debt maturity or published result. State the relevant horizon.

Use clear tables and definitions, not long lists of impressive jargon. This course’s notes are educational exercises, not a template that makes someone authorised to provide regulated research services. The practical goal is a reasoning chain another person can inspect and challenge.

Hypothetical worked example

A fictional recommendation-free memo

An imaginary building-materials firm is adding capacity. Your memo estimates utilisation at 55%, 70% and 80%, with the associated revenue, fixed cost and debt-service assumptions.

Instead of writing expansion guarantees upside, state that the thesis depends on selling the additional output without an unaffordable working-capital build. The next quarterly debtor and utilisation figures become explicit review items.

Common mistakes

Writing the conclusion first and selecting supportive evidence later.
Giving scenario probabilities with no estimation basis.
Hiding unresolved items behind a precise target.

Check your understanding

Which ending makes a research memo actionable for learning?

Make this chapter useful

Can you defend the reasoning?

Before moving on, answer the self-check in your own words and write why each alternative fails. Use the worked example to test that explanation. Then apply it in the module research task; keep the assumptions and the evidence that could change your answer.

Desk assignment

What to submit

Submit a two-page note: question, business map, source table, financial bridge, valuation range, countercase and review triggers.

Use the research ledger for dated evidence, or the module workbooks for calculations. Separate observations, assumptions and interpretation.

Sources and further reading

Further-reading references from the curriculum source list. Contract sizes, expiry calendars, settlement references, margin parameters and tax treatment can change; verify the current operative documents for the actual product. Worked figures are illustrative, not current quotes.

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General financial education. No securities recommendation, assured outcome or personal advice. Read the risk disclosures.