I'd now like to talk a little bit about some basic financial statement information. We talked about the fact that we would cover the financial statements in this course. We'll talk about it for a minute. So the types of financial statements that you would typically see is a balance sheet, an income statement and a statement of cash flow. And those statements taken together, particularly if they're audited, because if they're audited you give them a higher kind of credibility for being accurate. It enables an outside investor or an internal investor to evaluate the potential of a project and whether it's worth investing. Now most financial statements that are done internally are done on a cash basis. And if you look at cash versus accrual accounting, the differences can be significant. They can also have a significant impact on taxes. The accrual method provides a much more complete picture of what's going on. But just as I said this in not a course in corporate finance, this is also not a course in financial accounting and preparing balance sheets and income statements and cash flow statements. So you have to understand that the accrual method is more accurate, it provides, it recognizes revenues when they're earned. Like when you ship a product, that's when you earn it, because the customer now takes title to it, and you recognize expenses when the supplies or services are received by the corporation. The cash method recognizes revenues when the customer pays for the product, and they recognize it's been through a new supplier, when the company pays the supplier. So that could be a significant difference in a large company. For internal investment proposals, generally speaking, traditional financial statements are not generally required or even useful. The reason is that most internal projects are benefiting from shared costs. You have a human resources department, you have a marketing department, you have a financial accounting department. You have a sales group, you have a lot of departments who provide services to all of the individual product lines. So what you don't need is create a set of statements which assume you're going to acquire all of those capabilities in your proposal. So what a lot of companies will ask you is to prepare a basic understanding or a basic financial statement which shows, it's like the revenue stream based upon the reasonable assumptions based on product development and growth. How much are the incremental costs of generating those revenues and what economies of scale exist because you have these shared expenses? But it's just useful for you to know how financial statements work so that when you're asked by, let's say the person or persons who are looking at evaluating your proposal, can you explain to me what your contribution to the margin is, you should know how to discuss that. And that would be a straightforward process of looking at revenues less the incremental costs of generating those revenues. Now if you're coming in and presenting to a corporate finance group that you want to acquire a new company, completely new company, acquire the company, then you may be required to generate full financials or they'll have full financials that you'll probably request and, I'm guessing, it also would be audited financial statements. So just understand that the financial statements are a useful tool, they are generally not full blown financials when you're doing an internal investment proposal but you should have a general working knowledge of how all these things come together. So you can talk intelligently to the person who is actually developing the decision or making the decision on investment