started cash flow statement

mba/ch34.org

@@ -61,3 +61,51 @@
     - payroll
 
   - long term
+
+** Cash Flow
+- tells you about your income
+  - top line is sales / revenue
+  - bottom line is net income
+
+*** Financial Summary
+
+The following is a fictional summary of a the finances of a watch company
+
+**** Gross Profit
+| Category       | Quantity | Per Unit | Total  |
+|----------------+----------+----------+--------|
+| Sales          | 1000     | $300     | $300k  |
+| Cost           | 1000     | $200     | -$200k |
+| **Gross Profit** |          |          | **$100k** |
+
+**** Earnings Before Interest and Taxes (EBIT)
+| Expense Type                 | Amount   |
+|------------------------------+----------|
+| Marketing expenses           | -$10k    |
+| Employee expenses            | -$30k    |
+| Rent expense                 | -$17k    |
+| Depreciation                 | -$2k     |
+| **EBIT**                     | **$41k** |
+
+**** Earnings Before Taxes (EBT)
+| Item            | Amount   |
+|-----------------+----------|
+| Interest        | -$1k     |
+| **EBT**         | **$40k** |
+
+**** Net Income
+| Item            | Amount   |
+|-----------------+----------|
+| Taxes (25%)     | -$10k    |
+| **Net Income**  | **$30k** |
+
+
+*** Explanation of the Financial Summary
+
+1. *Gross profit*: the monty you bring in taking away only the cost of manufacture
+2. *Earnings Before Interest and Taxes (EBIT) / Operating Profit*
+   - this is also called "The Line"
+   - this composes operating expenses and depreciation
+   - depreciation is the wear and tear on your equipment
+     - in the US you can deduct that cost
+     - this means you can deduct from the use of even a car