Variance Analysis (vs budget and prior year)

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If you would like to learn in detail, how to calculate income statement variances and the impact they have on sales $, profit $ and profit margin % and ebitda %, and how to explain performance vs budget and prior periods, click on the link for a detailed video course (at a special price). You will also learn how to analyse and present the results of the variances to management and will be able to download solved variance calculation Excel templates. https://ebitda.thinkific.com/courses/...

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Income statement analysis
Learn how to perform income statement variance analysis versus budget and prior year. Calculate impact on gross profit margin and net profit or EBITDA margin %, using Excel and the example income statement used for analysis in the video.

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The analysis of the income statement requires comparing the different line items within a statement (vertical analysis), as well as following trend lines of individual line items over multiple periods (horizontal analysis). The income statement analysis of a business helps understand its ability to earn a profit, and the relationship of its expenses with its sources if income.

I will show you how to answer the most commonly asked questions from financial analysts, accountants and CFOs related to the financial performance of a business when compared to budgeted income statement and prior year income statement. I will show you a method to calculate variances line by line, applying both vertical income statement analysis and horizontal income statement analysis, so that you are easily able to explain the variances in terms of amounts as well as profit percentage.

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How to analyze income statement
Many new analysts and professionals find it hard to explain the drivers of gap vs budget in profit margin % including Gross profit margin (%) and Net Profit margin (%) or EBITDA %, specially when the actual volume of sales is different from budget and prior year. This requires that the analysis splits the impact of change in actual volume on profits and profit % from the impact of other drivers on the profit margin of the business. This helps to perform a thorough p&l analysis so that you are able explain variances in detail.

Comparative income statement analysis
In this video, I will show you, using Microsoft Excel, how you can build a very simple template for yourself, which you can use again and again, whenever the income statement numbers are updated month over month, to show you exactly the impact of variances on profit margin and net profitability of the business, compared to budget and prior year. This is a great financial statement analysis tool to explain the variances from volume changes and variances from other factors, such as price, mix, cost increase/decrease etc.

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