Evaluation should include purpose and interpretation of
- balance sheet
- assets
- liabilities
- equity (owners or shareholder’s equity)
- P&L statement (income statement)
- revenue (sales)
- cost of goods sold
- operating expenses
- gross profit
- operating income
- other income
- net income before taxes
- taxes
- net income or net loss
- cashflow statement
- cash inflows
- cash outflows
- net change in cash
- ending cash balance.
Process/Skill Questions:
- What is meant by the net worth of a business?
- How is net worth calculated?
- What are liabilities? How are they identified?
- How would a loan institution use one’s net worth to determine qualification for a loan?
- How can one improve one’s net worth?
- What is the difference between current and non-current liabilities?
- What is non-cash income?
- What is an example of a non-cash expense?
- How does a business use a P&L statement?
- What is the difference between a cashflow and a P&L statement?
- When should one evaluate a P&L statement?