Understanding Finance

Understanding Financial Statements

But it is pretty to see what money can do.

—Samuel Pepys

COMPANIES DO many things: build cars, process data, provide services, and even launch satellites. But the underlying purpose of all for-profit companies is to make money. As a for-profit manager, your job is to help the company make money—preferably, more money each year. Even if you work in the nonprofit or government sectors, where net income is neither the only nor the most important bottom line, it is still vital that you carefully monitor how much money comes in and where it gets spent.

You can help your company make money by reducing costs, increasing ...