Join Rudolph Rosenberg for an in-depth discussion in this video Gross margin, part of Financial Literacy: Reading Financial Reports.
- [Voiceover] There's a famous saying that goes like this.…Revenue is vanity, margin is sanity, and cash is reality.…What it means is that however big…the revenue of a company is,…it gives no insight whatsoever on its financial health.…Of course, it's impressive to be able to generate millions…or billions of dollars in revenue,…but focusing only on that element is a dangerous game.…If the cost of running your business…is as great as your revenue,…then the company generates no profit…and the owners of the company, the shareholders,…get no return for their investment.…
Even worse, if there's a downturn in the economy,…as we've experienced in the recent years,…the company will then be the first one…to be at risk of defaulting.…So this is why margin is sanity.…Making sure you generate a profit is the guarantee…that you're not just working to pay the bills.…You actually generate extra money that can be used…as a compensation for your investment, such as dividends,…or reinvested in the development of your company.…
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- What is a financial statement?
- Reading the balance sheet
- Understanding depreciation, liabilities, and equity
- Reading the income statement
- Understanding revenue, costs, profitability, and net income
- How cash flow works
- Analyzing financial documents with context<br><br>
- The PMI Registered Education Provider logo is a registered mark of the Project Management Institute, Inc.
Skill Level Appropriate for all
1. Financial Statements
2. The Balance Sheet
3. The Income Statement
4. The Cash Flow Statement
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