Business finances can be scary Let me break down the most important report (The Income Statement) so a second-grader could understand it: The Income Statement tells you whether or not you’ve made a profit over X period of time. It also shows why or why not. The formula: Revenue - Expenses = Profit Expenses are then broken down into 2 broad categories: 1. Cost of Goods Sold (COGS): these are costs related directly to the sale 2. Operating expenses: These are the overhead costs to run the business, but not directly related to revenue The income statement will help you tweak high-leverage variables: - Identify how much revenue/profit you bring in - Identify the leading causes of your situation - Understand your products margins and where you can cut costs or raise prices Boom, simple as that