Financial Planning, Budgeting, and Forecasting: Financial Intelligence Collection (7 Books)

5

Cracking the Code ofthe Income Statement

Note that word we used in the title to this chapter: code. Unfortunately, an income statement can often seem like a code that needs to be deciphered.

Here’s the reason. In books like this one—and even later in this book—you will often find cute little sample income statements. They look something like this:

Revenues	$100
Cost of goods sold	50
Gross profit	50
Expenses	30
Taxes	5
Net profit	$ 15

A bright fourth-grader wouldn’t need much help figuring out that one, once she had a little help with definitions. She could even do the math without ...