Join Rudolph Rosenberg for an in-depth discussion in this video Analyzing P&L components, part of Financial Analysis: Introduction to Business Performance Analysis.
…As we will see, there are different ways to analyze a P&L, and…the first one is by taking each component individual.…Each of the elements comprising a P&L represents a world in…itself with specific dynamics.…Underlying elements, it would need to be analyzed in a specific way.…For example, when you analyze the revenue of a company, it is…not enough to just look at the figures and see if they are trending up or down.…Of course, trending up is usually preferable, but…it doesn't tell you much about the performance.…
You don't really know why is going up and therefore, if it is sustainable or not.…Is it due to an external factor over which you have no control, and…could therefore drop soon after?…And if so, how much will it drop by?…These are typical questions you need to have answers to,…if you want to not only react to events but actually be ahead of the curve.…As we will see, there are internal factors, aswell as external factors that…affect the performance of each component of a P&L, and therefore of the company.…
This course, the first in our Financial Analysis series, introduces you to key concepts of business performance analysis. Author Rudolph Rosenberg focuses on the analysis of the profit and loss (the P&L) statement and on the key dynamics you need to understand in order to interpret the performance of your business. Understanding this data will help you make informed decisions that benefit your company in the long run.
Get started now with this quick primer. When you're ready for the next steps, check out Financial Analysis: Analyzing the Top Line with Excel and Financial Analysis: Analyzing the Bottom Line with Excel.
- Identify the three elements of a profit and loss statement.
- Recall the importance of performing a combined analysis.
- Distinguish between a controllable and an uncontrollable factor.
- Define an exceptional factor.
- Explain the difference between a dashboard and an analysis.