Improve Your Finance Skills by Learning to Read Your Company’s Income Statement

August 14, 2017

Improve Your Finance Skills by Learning to Read Your Company’s Income Statement

If you’re not a numbers person, finance can be a daunting subject. But understanding concepts like EBITDA and net present value are important no matter where you sit on the org chart. Boost your financial acumen by getting acquainted with your company’s income statement. Your goal is to understand how much your company spends and where it makes money. Reproduce the numbers in a spreadsheet, then group them into categories of profit and loss. Experiment with the figures on the balance sheet by going through a series of “what if” scenarios. What if prices were lower? What if revenue was higher? Convert the numbers to percentages so that you can visualize the breakdown of revenue and expenditures more easily. This exercise will help you see the big picture and internalize how financial models work.

Adapted from “How to Improve Your Finance Skills (Even If You Hate Numbers),” by Rebecca Knight