(4.1) Learning Goals

Module Goals

After completing Module 4, you will be able to:

1. Introduce the components of the income statement worksheet
2. Explain how to use income statement (P&L) to manage your business
3. Explain how to use the various financial documents
4. Compare the relationship between the various financial documents
5. Explain how to accurately report federal income taxes using the P L
6. Explain how to calculate cost of goods sold (COGS)
7. Explain how current ratios are used by bankers based on the business P&L
8. Explain how gross margins impacts profitability
9. Show the impact of the various financial documents on the income statement
10. Explain how net profit is reported on the Schedule C and Form 1040
11. Explain how ratios are used by bankers based on the (P&L) income statement
12. Calculate the degree of solvency based on data from income statement
13. Explain how the insufficient working capital affects decisions making
14. Relate the income statement to the Schedule C and Form 1040
15. Understand the difference between the the Schedule C and Form 1040
16. Explain how cash flow insolvency impacts daily business transactions
17. Explain how balance sheet insolvency impacts the owner’s net worth
18. Explain how to calculate gross margins from sales data