What is a Profit & Loss? A Profit & Loss shows the sales, cost, and expenses to arrive at Net income of profitability. We show investors how to read any P&L with this method. We compare Apple's, Estee Lauder's and Disney's P&L to practice. We show small business owners how to make a simple P&L with two examples. The cost to implement an ERP system such as SAP, Oracle's Net Suite or Quickbooks varies from $100 to $100 million. We explain which one is best depending on the size of the company. Students can get Microsoft Office's Excel free and we provide the link to download it on the slides. How to read a Balance Sheet. With this method, anyone can read any financial statement easily and understand the most important concepts. The material is meant for anyone, with a focus on students, small business owners and training programs for Non-finance managers. It's based on my practice as Vice President of Finance & CFO with slides selected from the material, I teach at NYU

1. George Benaroya

2. George Benaroya
2
Finance f or Marketing Decisions
G Benaroy a Lecure
How to use a P&L and BS to make money
►How to read financial statements
- What is a P&L? What is a Balance Sheet?
- How to identify the 3 main drivers of the P&L and the 5 on the BS
►How global multinationals use the P&L
- The P&Ls of Apple, Estee Lauder, Disney, Johnson & Johnson and Nestle
- Using the process to identify the key drivers on their P&Ls
►How to make a P&L with just a piece of paper?
- The cost of implementing SAP, Oracle and QuickBooks
- The P&L of Jenny, a student who takes this class and runs a shoe business on the side
►Why are financial statements so boring?
- How to make a P&L, BS and Cash flow that enables profitable growth
- What to do if your CEO asks that you prepare a short P&L
AGENDA
T h i
s c o v e r s :
Wh a t
i
s a P r
o f
i
t & L o s
s ?
W h
a t
i
s a P & L ?
W h
a t
i
s t h e
d i
f f
e r
e n c
e b e
t w e
e n a P &
L a n
d a n i
n c
o m e
s t a
t e
m e n t
? Wh y
w o u l
d y o
u w a n
t t o
u s e
a P & L
? H o w m u c
h d o
e s
i
t c o s
t t o
i
m p
l
e m e n t
a P & L
? Wh a
t d o
e s a
P & L l
o o k
l
i
k e ? H o w t
o r e
a d f
i
n a n c
i
a l
s t
a t e
m e n
t s
? T h e
3 m a i
n s e
c t
i
o n s
o f a
P & L A p
p l
e ’
s P &
L D i
s n
e y ’
s
P & L E s
t
e e L a
u d
e r
’ s
P & L
A s V P F i
n a
n c
e ,
G l
o b a l
C o
n t r
o l
l
e r
a n d C
F O a t
G l
o b a l
c o
m p a
n i
e s
, I
h a v e
l
e a r n
e d
w h a t
i
t t a k e
s t
o m a k e
g o o
d b u s
i
n e s
s d
e c i
s
i
o n s
b a s
e d o n
a P r o
f
i
t & L o s
s .
and CFO at Global companies, I have learned what it takes to make good business decisions based on a Profit & Loss.
T h i
s c o v e r s :
Wh a t
i
s a P r
o f
i
t & L o s
s ?
W h
a t
i
s a P & L ?
W h
a t
i
s t h e
d i
f f
e r
e n c
e b e
t w e
e n a P &
L a n
d a n i
n c
o m e
s t a
t e
m e n t
? Wh y
w o u l
d y o
u w a n
t t o
u s e
a P & L
? H o w m u c
h d o
e s
i
t c o s
t t o
i
m p
l
e m e n t
a P & L
? Wh a
t d o
e s a
P & L l
o o k
l
i
k e ? H o w t
o r e
a d f
i
n a n c
i
a l
s t
a t e
m e n
t s
? T h e
3 m a i
n s e
c t
i
o n s
o f a
P & L A p
p l
e ’
s P &
L D i
s n
e y ’
s
P & L E s
t
e e L a
u d
e r
’ s
P & L
A s V P F i
n a
n c
e ,
G l
o b a l
C o
n t r
o l
l
e r
a n d C
F O a t
G l
o b a l
c o
m p a
n i
e s
, I
h a v e
l
e a r n
e d
w h a t
i
t t a k e
s t
o m a k e
g o o
d b u s
i
n e s
s d
e c i
s
i
o n s
b a s
e d o n
a P r o
f
i
t & L o s
s .

3. George Benaroya
3
Finance f or Marketing Decisions
G Benaroy a Lecure
How long
will this last?

4. George Benaroya
Finance f or Marketing Decisions
G Benaroy a Lecture
4
What is a P&L?
A profit and loss (P&L) is a
statement that summarizes the
sales, costs, and expenses during a
specific period of time (quarter,
year).
Profit & Loss is also called Statement of Net Income, Statement of Operations or Results of Operations
w h a t i
s a p r o f i
t a n
d l
o s s
s t
a t e
m e n
t ,
w h a t
i
s a p r o
f
i
t a n d
l
o s s r
e p o
r t
A p r o f i
t a n d l
o s s
( P &
L )
i
s a s t
a t
e m e n
t t h
a t
s u m m a
r i
z
e s
t h e s
a l
e s
, c
o s t
s
, a n
d e x
p e n
s e
s d u
r i
n g
a s p e
c i
f
i
c p e r
i
o d ,
u s u
a l
l
y a y e a
r .
l
o g o s

5. George Benaroya
Finance f or Marketing Decisions
G Benaroy a Lecture
5
Can anyone make a P&L?
h o w t o m a k e a s
i
m p
l
e p r o
f i
t
a n d l
o s
s s t
a t
e m e
n t
, h o
w t o c
r e
a t e
a s i
m p l
e p r
o f
i
t a n
d l
o s s
s t
a t e
m e n
t i
n e x
c e l
,
h o w t
o c r
e a t
e a s
i
m p
l
e p r o
f i
t
a n d l
o s
s s t
a t
e m e
n t
, h o
w t o m a
k e a b a
s i
c
p r o
f i
t a n
d l
o s
s s t
a t
e m e
n t ,
h o
w t o c r
e a
t e
a s i
m p l
e p r
o f
i
t a n d
l
o s s
, h o
w t o c
r e a
t e
a b a s
i
c p r
o f
i
t a n d
l
o s s
s t a
t e
m e n t
,
h o w t o
m a
k e
a n e a s
y p r
o f
i
t a n
d l
o s s
s t
a t e
m e n
t

6. George Benaroya
Finance f or Marketing Decisions
G Benaroy a Lecture
6
Why would you want to use a P&L?
 To ruin your weekend doing boring stuff
 To sell more units, at a higher price, which were
produced at a lower cost
 To enhance your credibility
 To get a bank loan, comply with local
regulations
U s e o f a P & L , U s
e o f
a P r
o f
i
t & l
o s s
, u s
e o f
a n
i
n c o m e
s t a
t e
m e n t

7. George Benaroya
Finance f or Marketing Decisions
G Benaroy a Lecture
7
How much does it cost to implement a P&L?
$100 Million $100,000 $100 $1
Full implementation cost
NYU students get Excel (Microsoft Office ) free here
h h o w m u c h d o
e s
s a p
c o s
t t o
i
m p
l
e m e n t
,
h o w m u c
h d o
e s
s a p
c o s
t p e
r u s
e r
, h o
w m u c
h d o e
s s a
p c o
s t
p e r
y e a
r ,
h o w m u c
h d o
e s
s a p
e r p
c o s
t ,
h o w
m u
c h
d o e s
s a p
c o s
t
f o r
a s m a
l
l
b u s i
n e s
s ,
h o w
m u
c h
d o e s
a s a
p c o
s t
, h o
w m u c h
d o e
s s a
p a c
c o
u n t
i
n g s
o f
t w a
r e
c o s
t ,
h o w m u c
h d o
e s
a s a p
p r o
g r
a m c o
s t
, h o
w m u c
h s a
p e r
p c o s
t
, h o
w m u
c h
d o e
s s a
p e r
p s y
s t
e m c o
s t
, h
o w m u c
h d o e
s i
t c o
s t
f o
r s a
p ,
h o w m u c
h s
a p h a
n a
c o s
t ,
h o w m u
c h d o
e s
a s a p
h a n
a a p p
l
i
a n c e
r e a
l
l
y c o s
t ,
h o w m u
c h d o
e s
s a p
i
m p
l
e m e n t
a t
i
o n c
o s t
,
h o w m u c
h d o
e s
n e t s
u i
t
e c o
s t
t o i
m p l
e m e n
t ;
h o w m u c
h d o
e s
n e t
s u
i
t e c o
s t
f o
r a s m a
l
l
b u s i
n e
s s
; h o
w m u c
h d o e
s n e
t s
u i
t e
c o s
t p e
r u s
e r
,
h o w m u c
h d o e
s o r
a c
l
e n e t
s u
i
t e c
o s
t ,
h o w m u c
h d o
e s
n e t
s u
i
t e e r
p c o
s t
, h o
w m u c
h d o e
s n e
t s
u i
t e
t r
a i
n i
n g c
o s
t ,
h o w m u c
h d o
e s
n e t
s u i
t
e s o
f t
w a r
e c o
s t
,
h o w m u c
h d o
e s q
u i
c k b
o o
k s
c o s
t p e
r y e
a r ,
h o
w m u
c h
d o e
s q u i
c
k b o
o k
s c o
s t
f o
r s m a
l
l
b u s i
n e s
s
, h o
w m u
c h
d o e
s q u
i
c k b
o o k
s c o
s t
a m o n t
h ,
h o w m u
c h
d o e s
q u i
c
k b o
o k s
c o
s t
a y e a r
,
h o w m u c
h d o
e s
q u i
c k
b o o
k s
c o s
t f
o r
a s m a l
l
b u s
i
n e s
s

8. George Benaroya
Finance f or Marketing Decisions
G Benaroy a Lecture
8
The 3 main sections of a P&L
𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆 − 𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶 − 𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸 = 𝑁𝑁𝑁𝑁𝑁𝑁 𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼
Companies use different terminology. For simplicity, consider these terms to be the same:
• Net Sales and Net Revenue. Typically, Net Sales is used at companies selling goods and Net Revenue at companies selling services.
• Net Income, Net Earnings and Net Profit after Tax
U s e o f a P & L , U s
e o f
a P r
o f
i
t & l
o s s
, u s
e o f
a n
i
n c o m e
s t a
t e
m e n t

9. George Benaroya
Finance f or Marketing Decisions
G Benaroy a Lecture
9
Example #1. Apple’s P&L
% of Net Sales
P & L , p r o f i
t
l
o s s
, p & l
,
p r o
f
i
t a n d
l
o s s s
t a t
e m e
n t
, p &
l
s t a
t e m e
n t
, p
r o f
i
t a n
d l
o s s
,
p a n d
l
, p & l
m e
a n i
n g
,
p r o
f i
t l
o s
s s t
a t
e m e
n t
, a p
p l
e '
s P &
L ,

10. George Benaroya
Finance f or Marketing Decisions
G Benaroy a Lecture
10
Example # 2. Disney’s P&L
% of Revenue
P & L , p r o f i
t
l
o s s
, p & l
,
p r o
f
i
t a n d
l
o s s s
t a t
e m e
n t
, p &
l
s t a
t e m e
n t
, p
r o f
i
t a n
d l
o s s
,
p a n d
l
, p & l
m e
a n i
n g
,
p r o
f i
t l
o s
s s t
a t
e m e
n t
, D i
s n
e y
'
s P & L

11. George Benaroya
Finance f or Marketing Decisions
G Benaroy a Lecture
11
Example # 3. Estee Lauder’s P&L
% of Net Sales
P & L , p r o f i
t
l
o s s
, p & l
,
p r o
f
i
t a n d
l
o s s s
t a t
e m e
n t
, p &
l
s t a
t e m e
n t
, p
r o f
i
t a n
d l
o s s
,
p a n d
l
, p & l
m e
a n i
n g
,
p r o
f i
t l
o s
s s t
a t
e m e
n t
, E s
t e
e L a
u d
e r '
s
P & L
hat is a Profit & Loss? What is a P&L? What is the difference between a P&L and an income statement? Why would you want to use a P&L? How muchdoes it cost to implement a P&L? What sions
fortune 50 0logos,fortune 50 0 l
ogosandname s,fortune 500 company logos

12. George Benaroya
Finance f or Marketing Decisions
G Benaroy a Lecture
12
Jenny’s P&L (based on true story)
Jenny is a student at NYU and runs a high-
end shoe business on the side. A friend of
hers produces high quality, made to order
shoes in China which Jenny then sells to
wealthy shoppers in NYC for $1,000 each.
The cost to produce each pair of shoes is
$300.
Once per month, after taking the Finance
for Marketing Decisions class, Jenny goes
to Newark airport and gets on an Emirates
flight. She visits her mom, collects 10 pair
of shoes and flies back to NYC to attend
my class (she turns her homework on time).
H o w t o m a k e a s i
m p
l
e P & L ,
T h
e 3 m a i
n s e
c t
i
o n s
o f
a P & L ,
H o w t
o m a k
e a n i
n c
o m e s
t a
t e
m e n t
fortune 50 0logos,fortune 50 0 l
ogosandname s,fortune 500 company logos

13. George Benaroya
Finance f or Marketing Decisions
G Benaroy a Lecture
13
Jenny’s P&L
►Sales $10,000
- (10 pairs @ $1,000 each) 100%
►Cost $3,000
- (10 pairs @ $300 each) -30%
►Expenses $4,300
- (Travel @ 4,300) -43%
►Net Income $2,700
27%
Jenny runs a high-end shoe business. Once per month, Jenny goes
to Newark airport and gets on an Emirates flight to China. She buys
the shoes from a friend of hers, for $300 each. She then flies back
and sells each pair for $1,000 each.
H o w t o m a k e a s i
m p
l
e P & L ,
T h
e 3 m a i
n s e
c t
i
o n s
o f
a P & L ,
H o w t
o m a k
e a n i
n c
o m e s
t a
t e
m e n t

14. George Benaroya
Finance f or Marketing Decisions
G Benaroy a Lecture
14
Coach’s P&L
Jenny’s business has the same ratios as Coach:
Gross Profit= Sales or Revenue minus Cost of Sales
SG&A is 43% and Operating Income is 27%
Cost of sales is 30%,
C o a c h P & L ,
C o a c
h P r
o f
i
t & L o
s s
, C o
a c
h i
n c o
m e s t
a t
e m e
n t

15. George Benaroya
Finance f or Marketing Decisions
G Benaroy a Lecture
15
The CEO of your company heard you
are taking this class and has asked
you to prepare a short presentation
with a short P&L (up to 7 ratios).
Write down on a piece of paper 3 or
more financial ratios you think should
be included on your summary P&L
Reply online here.
Exercise. How would you build a P&L?
H o w t o m a k e a s i
m p
l
e P & L ,
T h
e 3 m a i
n s e
c t
i
o n s
o f
a P & L ,
H o w t
o m a k
e a n i
n c
o m e s
t a
t e
m e n t

16. George Benaroya
Finance f or Marketing Decisions
G Benaroy a Lecture
16
Why are financial statements so boring?

17. George Benaroya
Finance f or Marketing Decisions
G Benaroy a Lecture
17
Johnson & Johnson P&L
24 rows and 11 columns
That’s 264 data points
Hard to mentally do the
math for how big the
international business is
(39,697 ÷81,581)

18. George Benaroya
Finance f or Marketing Decisions
G Benaroy a Lecture
18
Johnson & Johnson Key P&L ratios. 2018
% Sales Basis FY 2018 FY 2017 FY 2016
Volume growth1 8.5% 8.0% 3.2%
Price Change1 -2.2% -2.0% 0.7%
Net Sales Growth1 6.7% 6.3% 2.6%
International Sales (%)2 49% 48% 47%
Cost of Product Sold3 33.2% 33.3% 30.3%
SG&A4 27.6% 28.1% 27.9%
Other Expenses6 20.4% 36.9% 18.8%
Net Earnings5 18.8% 1.7% 23.0%
Green: improvement vs. PY
Red: worsening vs. PY

19. George Benaroya
Finance f or Marketing Decisions
G Benaroy a Lecture
19
Johnson & Johnson P&L
International Sales2:
39,697 ÷ 81,581= 49%
Cost of Product Sold3:
27,091 ÷ 81,581= 33.2%
SG&A4:
22,540 ÷ 81,581= 27.6%
Other Expenses6:
Sales 100%
Cost -33.2%
SG&A -27.6%
Other Expenses ?
Net Earnings 18.8%
The difference is Other
expenses or 20.4%
Net Earnings5:
15,297 ÷ 81,581= 18.8%

20. George Benaroya
20
Finance f or Marketing Decisions
G Benaroy a Lecure
Do I have to
listen to this?

21. George Benaroya
Finance f or Marketing Decisions
G Benaroy a Lecture
21
What is a Balance Sheet?
A Balance Sheet is a
statement summarizing
what we own (assets),
what we owe (liabilities),
and what we invested
(our capital or equity)
𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴 = 𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿 + 𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸
w h a t a b a l
a n c e s h
e e
t d o
e s ,
w h a
t i
s a b a
l
a n c
e s h e
e t
a n d
h o w i
s i
t p r e
p a
r e
d ,
w h a t
i
s a b a l
a n c
e s
h e e
t a n
d w h a
t i
s i
t u s e
d f
o r
, w h a
t i
s a b a
l
a n c
e s h
e e t
a n d
w h a t
i
s i
t s p u r
p o
s e
, w h a
t i
s a b a
l
a n c
e s h
e e t
a n d
w h y i
s i
t p r
e p a
r e
d ,
w h a t
i
s a b a l
a n
c e
s h e
e t c
o m p
o s e
d o f
,
w h a t
i
s a b a l
a n c
e s
h e e
t e x
a m p
l
e , w h
a t i
s a b a
l
a n c
e s h
e e
t f o
r s
m a l
l
b u s i
n e
s s
,
w h a t
i
s a b a l
a n c
e s
h e e
t i
n b u s
i
n e s
s ,
w h a
t i
s a b a
l
a n c
e s h e
e t
s i
m p l
e d e
f i
n i
t
i
o n
e c i
s i
o n s
fortune 50 0logos,fortune 50 0 l
ogosandname s,fortune 500 company logos

22. George Benaroya
Finance f or Marketing Decisions
G Benaroy a Lecture
22
Why would you want to use a Balance Sheet?
 To ruin your weekend counting inventory
 To sell more units, at a higher price, which
were produced at a lower cost
 To know how many units to have in stock,
whether to sell on cash or credit and how to
finance operations
b e t w w h a t a b a l
a n c
e s h
e e
t d o
e s ,
w h a
t i
s a b a
l
a n c
e s h
e e t
a n d
h o w i
s i
t p r
e p a
r e
d ,
w h a t
i
s a b a l
a n c
e s
h e e
t a n
d w h a
t i
s i
t u s
e d f
o r
, w h a
t i
s a b a
l
a n c
e s h
e e t
a n d
w h a t
i
s i
t s p u
r p o
s e
, w h
a t i
s a b a
l
a n c
e s h
e e
t a n d
w h y i
s i
t p r
e p
a r e
d ,
w h a t
i
s a b a l
a n
c e
s h e
e t
c o m p
o s e
d o f
,
w h a t
i
s a b a l
a n
c e s
h e e
t e x
a m p
l
e , w h
a t i
s a b
a l
a n c
e s h
e e
t f o
r s
m a l
l
b u s i
n e
s s
,
w h a t
i
s a b a l
a n c
e s
h e e
t i
n b u s
i
n e s
s ,
w h a
t i
s a b a
l
a n c
e s h
e e t
s i
m p l
e d e
f i
n i
t
i
o n ,
e e n a P & L a n d a n i
n c
o m e s
t a t
e m e
n t
? Wh y w o
u l
d y o u
w a n t
t o u
s e a P
& L ?
H o w m u c
h d o e
s i
t c
o s t
t o
i
m p l
e m e
n t
a P & L
? Wh a t
d o e
s a P &
L l
o o k
l
i
k e ? H o w t o
r e a
d f i
n
a n c
i
a l
s t a
t e
m e n t
s ?
T h e
3 m a
i
n s e c
t
i
o n s
o f a P &
L A p p
l
e ’
s P & L
D i
s n e
y ’
s P &
L E s
t e
e L a
u d e
r ’
s
P & L A s
V P F i
n a
n c e
,
G l
o b a l
C o n
t r
o l
l
e r a
n d C F
O a t
G l
o b a l
c o
m p a n
i
e s ,
I h a
v e
l
e a r n
e d w h a
t i
t t a
k e
s t o
m a
k e
g o o d
b u s
i
n e s
s d e
c i
s i
o
n s b a
s e
d o n
a P r o
f i
t
& L o s
s .
F i
n a n c e f o r Ma r
k e
t i
n g
D e c i
s
i
o n s
f o r t u n e 5 0
0 l
o g o
s ,
f o
r t
u n e
5 0 0
l
o g o s
a n d n a
m e s
, f
o r
t u
n e 5 0
0 c o
m p a
n y l
o g
o s

23. George Benaroya
Finance f or Marketing Decisions
G Benaroy a Lecture
23
How to read any BS. The 5 main business drivers
Companies use different terminology:
Property, Plant & Equipment (PPE) is also called Fixed Assets. Examples include Land, Buildings and Machinery
Both Receivables and Inventories are typically shown on a Net Basis (e.g. Net Receivables, Net Inventory)
Debt that is due after 12 months is referred to as long-term debt
w h a t a b a l
a n c e s h
e e
t d o
e s ,
w h a
t i
s a b a
l
a n c
e s h e
e t
a n d
h o w i
s i
t p r e
p a
r e
d ,
w h a t
i
s a b a l
a n c
e s
h e e
t a n
d w h a
t i
s i
t u s e
d f
o r
, w h a
t i
s a b a
l
a n c
e s h
e e t
a n d
w h a t
i
s i
t s p u r
p o
s e
, w h a
t i
s a b a
l
a n c
e s h
e e t
a n d
w h y i
s i
t p r
e p a
r e
d ,
w h a t
i
s a b a l
a n
c e
s h e
e t c
o m p
o s e
d o f
,
w h a t
i
s a b a l
a n c
e s
h e e
t e x
a m p
l
e , w h
a t i
s a b a
l
a n c
e s h
e e
t
f o r s m a l
l
b u s
i
n e s
s ,
w h a t
i
s a b a l
a n
c e
s h e
e t i
n b u
s i
n e
s s
, w h a
t i
s a b a
l
a n c
e s h
e e t
s i
m p l
e d e
f
i
n i
t i
o n ,

24. George Benaroya
Finance f or Marketing Decisions
G Benaroy a Lecture
24
Example #1. Apple’s Balance Sheet
% of Net Sales
H o w t o r e a d A p p l
e '
s
B a l
a n c
e S h
e e
t

25. George Benaroya
Finance f or Marketing Decisions
G Benaroy a Lecture
25
v
% of Net Sales
v
v
Example #2. Disney’s Balance Sheet
T h i
s c o v e r s :
Wh a t
i
s a P r
o f
i
t & L o s
s ?
W h
a t
i
s a P & L ?
W h
a t
i
s t h e
d i
f f
e r
e n c
e b e
t w e
e n a P &
L a n
d a n i
n c
o m e
s t a
t e
m e n t
? Wh y
w o u l
d y o
u w a n
t t o
u s e
a P & L
? H o w m u c
h d o
e s
i
t c o s
t t o
i
m p
l
e m e n t
a P & L
? Wh a
t d o
e s a
P & L l
o o k
l
i
k e ? H o w t
o r e
a d f
i
n a n c
i
a l
s t
a t e
m e n
t s
? T h e
3 m a i
n s e
c t
i
o n s
o f a
P & L A p
p l
e ’
s P &
L D i
s n
e y ’
s
P & L E s
t
e e L a
u d
e r
’ s
P & L
A s V P F i
n a
n c
e ,
G l
o b a l
C o
n t r
o l
l
e r
a n d C
F O a t
G l
o b a l
c o
m p a
n i
e s
, I
h a v e
l
e a r n
e d
w h a t
i
t t a k e
s t
o m a k e
g o o
d b u s
i
n e s
s d
e c i
s
i
o n s
b a s
e d o n
a P r o
f
i
t & L o s
s .
Finance for Marke ti
ng Decisi
ons
fortune 50 0logos,fortune 50 0 l
ogosandname s,fortune 500 company logos
H o w t o r e a d D i
s n e y
'
s B a
l
a n c e
S h e
e t

26. George Benaroya
Finance f or Marketing Decisions
G Benaroy a Lecture
26
1
2
3
Example # 3. Estee Lauder’s Balance Sheet
% of Net Sales
H o w t o r e a d e s t
e e L
a u d
e r
'
s B a l
a n
c e
S h e
e t

27. George Benaroya
Finance f or Marketing Decisions
G Benaroy a Lecture
27
How to make our own BS. Jenny’s BS (based on true story)
Jenny is a student and runs a high-end
shoe business on the side
She buys high quality, made to order shoes
from a friend for $300, and sells them for
$1,000
Once per month, Jenny flies to China, buys
the shoes, brings them back, and sells
them at her apartment
Let’s look at the BS transactions by date
h o w t o c r e a t e
a b a l
a n
c e
s h e
e t
a n d i
n c
o m e s
t a
t e
m e n t
,
h o w t o
m a
k e a
b a l
a n c
e s
h e e
t a n
a l
y s
i
s ,
h o w t o
m a
k e a
b a l
a n c
e s
h e e
t e x
a m p
l
e , h o
w t o m a
k e a b a
l
a n c
e s h
e e
t f o
r a s
m a l
l
b u s i
n e
s s
,
h o w t o
m a
k e
a b a l
a n c
e s
h e e
t f
o r
b u s
i
n e s s
,
h o w t o
m a k e
a b a l
a n
c e
s h e e
t f
o r
b u s
i
n e s
s p l
a n
, w h a
t a b a
l
a n c
e s h
e e
t d o
e s

28. George Benaroya
Finance f or Marketing Decisions
G Benaroy a Lecture
28
1. Buys an Airline Ticket
SG&A* (Travel) $4,300 AccountsPayable $4,300
Jenny’s BS. Monday. Payables
Once per month, after taking the Finance for
Marketing Decisions class, Jenny goes to
Newark airport and gets on an Emirates
flight to China.
Selling, General & Administrative (SG&A expenses). Travel is included there for expenses not related to manufacturing
w h a t i
s a c c o u n
t s
r e c
e i
v a
b l
e a n d
a c c
o u
n t
s p a
y a b
l
e , w h
a t i
s a c
c o
u n
t s
r e c
e i
v a
b l
e i
n a c c
o u
n t
i
n g ,
b a l
a n
c e s
h e e
t w h a
t i
s p a
y a b
l
e s a n
d r e
c e
i
v a b
l
e s

29. George Benaroya
Finance f or Marketing Decisions
G Benaroy a Lecture
29
Jenny buys the shoes from a friend, who produces
high quality, made to order shoes in China. The
cost to produce each pair of shoes is $300.
29
1. Buys an Airline Ticket
SG&A (Travel) $4,300 AccountsPayable $4,300
3. Buys the Shoes
Inventory $3,000 AccountsPayable $7,300
w h a t i
s i
n v e n t o r
y o n t
h e b a
l
a n c
e s h
e e t
Jenny BS. Wednesday. Inventory & Payables

30. George Benaroya
Finance f or Marketing Decisions
G Benaroy a Lecture
30
Jenny’s BS. Saturday. Cash & Inventory
Jenny flies back on Fridays and sells the
shoes to wealthy shoppers in NYC for $1,000
each on Saturday
1. Buys an Airline Ticket
SG&A (Travel) $4,300 AccountsPayable $4,300
2. Gets the shoes
Inventory $3,000 AccountsPayable $7,300
3. Sells the Shoes
Cash $10,000
Inventory $0
AccountsPayable $7,300
Net Income $2,700
P w h a t i
s a c c o u
n t s
r e
c e i
v
a b l
e a c
c o
u n
t i
n g
, w h a
t i
s a c
c o
u n t
s r
e c
e i
v a b
l
e a n d
a c c
o u
n t s
p a y
a b
l
e , w h a
t i
s a c
c o
u n t
s
r e c
e i
v a b
l
e i
n a c c
o u
n t i
n
g ,
w h a t
i
s a c c
o u n
t s
r e c
e i
v a
b l
e m e a
n ,
w h a t
i
s b a l
a n
c e s
h e e
t c
o m p o
n e
n t s
,
w h a t
i
s b a s
i
c b a l
a n
c e
s h e
e t ,
w h a
t i
s i
n v e
n t o
r y
o n t h
e b a
l
a n c
e s h
e e t
, w h
a t
i
s p a y a
b l
e s
a n d r
e c
e i
v a b
l
e s
& L A s V P F i
n a n c e ,
G l
o b a
l
C o n t
r o
l
l
e r a n d
C F O a t
G l
o b a
l
c o m p a
n i
e s
, I
h a v
e l
e a r
n e d
w h a t
i
t t a k
e s
t o m a k
e g o o
d b u
s i
n e
s s
d e c
i
s i
o n s
b a s
e d
o n a P r
o f
i
t & L o s
s
.
Finance for Marke ti
ng Decisi
ons
fortune 50 0logos,fortune 50 0 l
ogosandname s,fortune 500 company logos

31. George Benaroya
Finance f or Marketing Decisions
G Benaroy a Lecture
31
Jenny’s BS. Cash & Payables
Jenny pays both her Visa card ($4,300 on travel
expenses) and her friend ( $3,000) on Sundays
1. Buys an Airline Ticket
SG&A (Travel) $4,300 AccountsPayable $4,300
2. Gets the shoes
Inventory $3,000 Accounts Payable $7,300
3. Saturday. Sells the Shoes
Cash $10,000 AccountsPayable $7,300
Inventory $0 Net Income $2,700
4.Pays all her debts
Cash $2,700 Accounts Payable $ 0
Net Income $2,700
w h a t i
s a c c o u n
t s
r e c
e i
v a
b l
e a c
c o u
n t
i
n g ,
w h a t
i
s a c c
o u
n t
s r e
c e
i
v a b l
e a
n d a c
c o
u n
t s
p a y a
b l
e ,
w h a t
i
s a c c
o u
n t
s r e
c e
i
v a b l
e
i
n a c c o
u n
t i
n g
, w h a
t i
s a c
c o
u n t
s r
e c
e i
v a b
l
e m e a n
, w h
a t i
s b a
l
a n c
e s h
e e t
c o
m p o n
e n
t s
, w h a
t i
s b a
s i
c b a
l
a n c
e s h
e e
t ,
w h a t
i
s i
n v e n
t o r
y o n
t h e
b a l
a n
c e
s h e
e t ,
w h a
t i
s p a y
a b
l
e s a n
d r e
c e
i
v a b l
e s

32. George Benaroya
Finance f or Marketing Decisions
G Benaroy a Lecture
32
Jenny’s Christmas Sale and Cash Flow issues
Jenny believes that for Christmas she can sell 50 (instead of 10) pairs of shoes. That would bring her
revenue to $50,000. Her friend has told her, however, that he can only give her credit for 10. If she
wants him to produce 40 more, she needs to give him cash to buy the raw materials.
Jenny doesn’t have any cash. She needs to solve 3 problems and has asked for your help. What would
you recommend her to do?
Cash problem
Jenny needs to pay in advance to her friend $12,000 (40 @ 300). Where can she get the cash from?
Inventory problem
Jenny doesn’t know whether she will sell all 50 shoes. It could be that she gets demand for 100. If that
is the case, to which clients should she sell the shoes: 1)old clients 2)new clients 3)random
Accounts Receivable
Jenny gets paid in cash. A friend told her that she should take credit cards. That way, she could take
orders in advance. It could also be the case that she is unable to sell all 50 shoes because some
clients don’t have cash on them. If she was to give credit, she could sell more. Should she?

33. George Benaroya
Finance f or Marketing Decisions
G Benaroy a Lecture
33
Should Jenny start taking credit cards?
Respond online here
You will be able to see
how others responded
after you respond

34. George Benaroya
Finance f or Marketing Decisions
G Benaroy a Lecture
34
Which customers should we prioritize ?
Respond online here
You will be able to see
how others responded
after you respond

35. George Benaroya
Finance f or Marketing Decisions
G Benaroy a Lecture
35
Jenny’s Balance Sheet. Same numbers. Two versions
Monday
0
0
0
0
4,300
4,300
0
0
0
0
0
4,300
0
4,300
0
4,300
0
0
0
0
0
0
Wednesday
0
0
0
3,000
4,300
7,300
0
0
0
0
0
7,300
0
7,300
0
7,300
0
0
0
0
0
0
Saturday
10,000
0
0
0
0
10,000
0
0
0
0
0
10,000
0
7,300
0
7,300
0
0
0
0
2,700
0
Sunday
2,700
0
0
0
0
2,700
0
0
0
0
0
2,700
0
0
0
0
0
0
0
0
2,700
0
Jenny’sBalance Sheet

36. George Benaroya
Finance f or Marketing Decisions
G Benaroy a Lecture
36
1. On a P&L, focus on these 3 main sections:
Sales, Cost of Sales and Expenses.
2. On a BS, focus on these 5 main sections:
Receivables, Inventory, PPE, Payables
and Debt.
3. To read any financial statement, visually
identify those 8 sections. The rest is easy.
4. Financial statements can be boring. It’s
easy to change that and create actionable
management information. This will help
you sell more units, at a higher price, with a
lower cost.

37. George Benaroya
Finance f or Marketing Decisions
G Benaroy a Lecture
37
What did you learn today that you liked most?
Respond online here
You will be able to see
how others responded
after you respond

38. George Benaroya
Finance f or Marketing Decisions
G Benaroy a Lecture
38
What can we improve to make the next session better?
Respond online here
You will be able to see
how others responded
after you respond

39. George Benaroya
Finance f or Marketing Decisions
G Benaroy a Lecture
39
Access to these material
Download the slides, see answers to
other questions in the class’ blog
Watch the videos on YouTube
youtube.com/c/GeorgeBenaroya
How to read a P&L How to read a BS
How to use the excel file to make a Cash Flow
How to make a Cash Flow statement