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Foundation · Business basics

Business basics for non-business learners

The business ideas every case assumes you know: how a company reports profit, how costs behave, what one customer is worth, how markets and prices work, why profit is not cash, and how eight major industries make money.

61 min6 lessons Last reviewed
Start lesson 1 The profit and loss statement, line by line

Key takeaways

  • The profit and loss statement (P&L, also called the income statement) starts with the money a company earns and subtracts each type of cost, one line at a time, until only profit is left.
  • Fixed costs stay the same when sales change; variable costs move with each unit sold.
  • A company can grow and still be losing ground: always compare its growth with the market's growth, and when price changes, check how much the quantity sold changes too.
  • The balance sheet shows what a company owns and what it owes on one day; profit shows how it performed over a year; and cash is what it can actually spend, which can be very different from profit.
  • Before you structure a case in an unfamiliar industry, ask yourself three things: how does this business make money, what are its biggest costs, and which two or three numbers does it watch most closely.
By the end you will be able to
  • Read a profit and loss statement line by line
  • Explain fixed and variable costs, operating leverage, and unit economics
  • Work with market share, growth, and price elasticity
  • Explain why a profitable company can run out of cash
  • Describe how eight major industries make money and what they measure

Lessons

1

The profit and loss statement, line by line

How revenue becomes profit, one line at a time, with a worked example.

9 min
2

Fixed and variable costs, operating leverage, and unit economics

How costs behave when sales change, and what one order or one customer is worth.

12 min
3

Market share, growth, and price elasticity

Is a company winning or just riding a growing market? And what happens to revenue when price changes?

11 min
4

A light balance sheet, and why profit is not cash

What a company owns and owes, working capital, capital spending, and how a profitable company can run out of cash.

9 min
5

Industry primers: retail, consumer goods, banking, telecom

How each industry makes money, the numbers it watches, and the case questions you are likely to meet.

9 min
6

Industry primers: airlines, pharma, software, energy

Four more industries you will meet often in cases, one page each.

9 min

Worked cases in this module

Look it up

Key terms