Chapter 4: Profit

In this Chapter:

• The profit component of step 3 in the financial value process: identify financial imperatives

• How to read an income statement

• Why revenue and sales mix are so important

• The four key profit lines in an income statement

• Examples of financial value chains connected directly to revenues , expenses, and profit lines

• Some important profit ratios.

Profit (or loss) is where the analysis of financial performance begins. Examining profit begins your work on step 3 of the financial value process: identify financial imperatives. Accounting terminology is not standardized for the report that depicts an organization ‚ s profit and loss. This report may have such titles as profit and loss statement, statement of operations, income statement, or a similar name . This discussion sticks with the widely recognized term income statement.