how to read an income statement
TRANSCRIPT
Summary of a management's performance as reflected in the profitability (or lack of it) of a firm over a certain period. It itemizes the revenues, cost of sales and expenses over a period of time that led to the current profit or loss.
Interpret results using simple analytical procedures…
Use that knowledge to improve future performance…
Use the data as your platform for future budgets…
Understand trends and take corrective action….
We’ll help you…
Understand trends and take corrective action….
Sales dropped but Gross Margin went up!
19% 27%
Interpret results using simple analytical
procedures…
Bank fees spiked….which means Cash Flow is tight. Possible corrective action…Bank Line of Credit?
19% 27%
Use the data as your platform for future
budgets…
Expenses are stable, profits increased and yet cash flow is tight? Most likely answer is your customers are taking longer to pay.
19% 27%
Use that knowledge to improve future performance…
Sales dropped, Gross Margin went up and Expenses are stable.
19% 27%
Take away: The top line is not as important as your bottom line.
