Case Study: SayAhh’s Financial Statements for August (Part 3)

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By Brad Feld (Managing Director, Foundry Group) Editor's note: This is a continuation from last week's overview of balance sheet and statement of cash flows.

Now that Dick and Jane have added a CTO to SayAhh’s founding team, they’ve turned their full attention to working on their product. Today, we’ll look at the impact of the expenses to date on the P&L, Balance Sheet, and Cash Flow Statement.

Since SayAhh is in the pre-launch development stage, the company doesn’t have any revenue yet. They also haven’t launched a product, so there is no corresponding “cost of goods sold” –- the direct cost of delivering their product. This results in a gross margin of $0, where gross margin is revenue –- cost of goods sold.

The default Quickbooks setup uses “Income” to refer to “Revenue”. Since the Income (“Revenue”) line is $0 and the the gross margin is $0, Dick and Jane haven’t really noticed this yet. For now, we’ll leave it as is but once Dick and Jane meet with a mentor who is a CFO we expect this will change.

» Read the full post at Feld Thoughts.

Editor's note: Brad Feld blogs on Finance Fridays -- Stay tuned for next week's Finance Friday! About thte guest blogger: Brad Feld has been an early stage investor and entrepreneur for over twenty years. Prior to co-founding Foundry Group, he co-founded Mobius Venture Capital and, prior to that, founded Intensity Ventures. Brad is also a co-founder of TechStars. In addition to his investing efforts, Brad has been active with several non-profit organizations and currently is chairman of the National Center for Women & Information Technology. He blogs at www.feld.com and www.askthevc.com.