7

By now you understand the handful of thing that will determine if your organization – whether
you work for a business,a nonprofit , or a government agency -will succeed , and you know the
fundamental don’t differ whether you are running a fruit stand or a Fortune 500 Company.

The point is to concentrate on the things that make your company thrive :

1. Taking care of customers

2. Generating cash
3. Earning a good return on invested capital
4. Growing profitably

That isn’t surprising. To comply with Generally Accepted Accounting Principles (GAAP) – the
common standards and procedures companies use to build their financial statements- and various
federal reporting regulations, companies generate a slew of member.
Fortunately, you don’t need to master each line, number, and footnote. In fact, to get and idea of how
well a company I being run, you usually only have to look a three sets of fairly straightforward numbers :

1. Company profit and loss (P+L) (ncome statement), wich summarizes revenues and costs

2. The balance sheet, which is a summary of the company assets , liabilities , shareholders equity.
It is called a balance sheet because assets must always equal liabilities plus shareholder equity
(that’s must balance)

3. Cast flow statements ,which tracks the amount of cash entering and leaving the company.
Staying with the P+L statement,take a look at gross margins, take your company total revenues
and subtract the cost of goods gold.

Amazon Is progressively moving to cell groceries, a notoriously competitive business, that would
certainly further cement relationship with the costumers, but it would be shrink the margins. While you
want to see the same or more spending every year in the areas that are pivotal to the company’s
growth, conversely you also want to see that a company is keeping a tight rein on general and
administrative expenses. On the related note, you also want to take a look at sales and marketing
expenses. If you are a consumer of product company, as Amazon is, you need to reach consumers, and
that means spending money on marketing.
 That bring us to profits. As you can see, accounting-driven profit is not something Jeff Bezos
really care about. He cares about cash per share of stock. What have we learned is this relatively
numbers are really all you need to look at to get a good understanding of the financial shape of Amazon,
or any other company. You can see Amazon is taking care of the business fundamental to serving its
customers, growing profitably, and using money wisely. You know what to look n Amazon need to keep
an eye on trends. If this change, you need to ask why.