Let's say this is what we assume is how many cupcakes we sell.

And we'll make it more complicated in the future

So this kind of the cash income statement,

This is just the money directly from the cupcakes.

Let's see if we can use our example to understand the 3 types of income statements and hopefully understanding those income statements will also help us understand this example.

No. I want a period on this sentence.

So this right here you could view as our income statement.

How much am I making from operating the business?

And then in month 4 we actually earned the revenue.

So hopefully this gives you a idea of why accrual gives a better picture of what's happening in a buisness.

Give a better indication of what's actually going on in the buisness, and the way I did it in the first two videos, the first column over here

And I'll write the common acronym in there, COGS.

One of the interesting thing about costs is that in the old days costs and revenue, the minute you started your company, your investors said oh, we know how to track all this.

And I won't go into all of the details of an income statement, but any income statement you look at will have this operating profit line.

But what you really need to be doing is working with your investors and your management team is to derive the metrics that matter.

It's the top line of the income statement.

Anyway, going back to Price to Earnings, we calculated the

Spread Sheet Document...

Recalculate Document

So in this period, I made 350,000.

And here we'll literally just take whatever is reported from the income statement.

You get better decision making, and you get less herd behavior, and both of those things hit your bottom line with very positive results.

How much are you worth at any one moment?

And we'll focus on that a little bit later because that's a little bit more nuanced relative to the income statement.

So let's say it's 3 million.

We found activity in other brain regions also in a brain region associated with calculating gains and losses.

My head I think implicitly made the numbers work out nicely.

And we could have modeled out their income statements further.

Counting files in archive

Before I go into price to earnings and all that, I want to connect the dots between the income statement and the balance sheet.

As you start putting all this into a spread sheet you actually start building the classic income statement balance sheet and cashflow we haven't even had you do yet.

It could be a quarterly income statement.

Top line is revenue.

And we'll talk about earnings per share in this case.

It would be minus 12,500 in each year, depreciation expense, and we would account for it on the balance sheet.

Histogram calculation...

Cash converter and calculator

I figure now is as good a time as any to learn about probably what most people focus the most on when they analyze companies, and that's the income statement.

Calculators

Gas Calculator

Mass Calculator

Calculator

Calc

Arithmetic

Compute