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Finance for Non-Financial Managers
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Manager’s Checklist for Chapter 4
❏ Don’t get confused by the wide variety of line item labels
on income statements. The labels are attempts to adapt to
top management preferences or unique aspects of one
company or industry compared with others. Look for the
common thread, e.g., marketing is marketing, even if the
label is a little different.
❏ Don’t get tempted by accounting tricks. Remember that
sales belong in the periods in which they were earned and
completed, not necessarily where they look good.
❏ There are a few really key numbers on any income state-
ment: sales, gross profit, operating income or EBITDA,
and net income. These are the numbers that are most
often used to measure profit performance by everyone
who has an interest in the company.
❏ The income statement is the most familiar measure of a
company’s performance over a period of time. Its value
increases substantially if it’s compared with a benchmark,
such as a budget, prior month, or prior year. The compari-
son enables you to better judge the company’s perform-
ance.