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SET THE CONTEXT
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MARKET ANALYSIS AND BUSINESS POSITIONING
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DEVELOP YOUR SALES FORECAST
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DEVELOP YOUR OPERATIONAL AND COST PLAN
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DEVELOP YOUR CASH FLOW PROJECTIONS
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DETERMINE YOUR FINANCING STRATEGY
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INTERPRETING THE INCOME STATEMENT
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INTERPRETING THE BALANCE SHEET
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INTERPRETING THE CASH FLOW STATEMENT
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CONCLUSION
How to read an income statement
- Total revenue: Money brought in from sales of goods and services
- Cost of goods sold: Amount of money spent to buy or create products sold
- Gross profit = Total revenue – Cost of goods sold
- Operating expenses: salaries, marketing, rent – can’t be linked directly to the production of goods and services
- Operating income: Money from core operations
- Other income/expenses: Interest from savings accounts, interest on loans
- Net income = Income before tax – income tax
- Net income is known as the bottom line