Case type 03
Profit and loss
Reading a full income statement, finding the line that moved profit most, and explaining why it moved.
21 min1 lesson Last reviewed
Start the lesson Profit and loss
How do you approach a profit and loss case?
- Compare each line of the income statement across periods, find the line that moved profit most, reconcile the numbers, then explain why that line moved.
- The most common mistake: reading every line aloud without saying which one matters, or mixing up gross profit and operating profit.
- Do not read every line aloud. Rank the lines by how much each one moved profit in money, lead with the biggest, and use each line as a percent of revenue to see what grew out of line with sales.
By the end you will be able to
- Read an income statement from revenue down to net income
- Rank lines by their effect on profit and use margins to see what grew out of line
- Split the moving line into price, volume, and cost per unit
Worked cases in this module
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Common questions: Profit and loss
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