Profit and loss statement

Expenses
The profit and loss statement is a summary of a businesss income and expenses over a
specific period. It should be prepared at regular intervals (usually monthly and at financial
year end) to show the results of operations for a given period. Profit or loss is calculated in
the following way:
Less
Sales Discounts
Sales Commissions
Equals
Gross Profit
Less
Expenses
(Fixed & Variable)
Opening Stock
Equals
Plus
Stock Purchases
Equals
Stock available for sale
Less
Cost of Goods Sold
Less
Equals
Sales
Net Sales
HINT
Only those businesses that
have goods (products) to
sell will use the calculation
of cost of goods sold
Net Profit
TIP
Regularly produce profit and loss
information (monthly) and compare
against previous months activities to
ensure your profit expectations are
being met.

Closing Stock
Calculating the cost of
goods sold varies
depending on whether the
business is retail, wholesale,
manufacturing, or a service
business. In retailing and
wholesaling, computing the
cost of goods sold during
the reporting period involves
beginning and ending
inventories. This, of course,
includes purchases made
during the reporting period.
In manufacturing, it involves
finished-goods inventories,
plus raw materials
inventories, goods-in
process inventories, direct
labour, and direct factory
overhead costs.
In the case of a service
business, the revenue is
being derived from the
activities of individuals
rather than the sale of a
product and hence the
calculation of cost of goods
sold is a smaller task due to
the low-level use of
Equals
sold is a smaller task due to
the low-level use of
materials required to earn
the income.

Income
Sales $52,000
Total Sales $52,000
Opening Stock $ -
Stock Purchases $34,320
Less Closing Stock $3,120
$20,800
Expenses
Advertising $500
Bank Service Charges $120
Insurance $500
Payroll $13,000
Professional Fees (Legal, Accounting) $200
Utilities & Telephone $800
Other: Computer Software $480
Expenses total $15,600
$5,200
Profit and Loss Statement
For the Period ended Year One
Where a business is a service business, that is, you are selling services not goods or
products, then the profit and loss statement will generally not have a cost of goods sold
calculation. In some instances, where labour costs can be directly attributed to sales, then
you may consider including these costs as a cost of goods (services) sold.
Joes Cost of Goods Calculation
Opening Stock Nil
Add Stock Purchased during the year $34,320 (1100 tyres @ 31.20 each)
Equals Stock available to sell $34,320
Less Stock on hand at end of year $ 3,120 (100 tyres @ 31.20 each)
Cost of Goods Sold $31,200
Note; Cost of Goods Sold calculation:
Towards the end of the year, Joe manages to purchase 100 more tyres on credit from his
supplier for an order in the new year. This leaves him with $3,120 of stock on hand at the
end of the year.
Cost of Goods Sold
Total Cost of Goods Sold(COGS)
$31,200
Gross Profit
Net Profit before Tax
Joes Motorbike Tyres
Calculating the cost of
goods sold varies
depending on whether the
business is retail, wholesale,
manufacturing, or a service
business. In retailing and
wholesaling, computing the
cost of goods sold during
the reporting period involves
beginning and ending
inventories. This, of course,
includes purchases made
during the reporting period.
it involves
goods inventories,
plus raw materials
inventories, goods-in-
process inventories, direct
labour, and direct factory
In the case of a service
business, the revenue is
being derived from the
activities of individuals
rather than the sale of a
product and hence the
calculation of cost of goods
sold is a smaller task due to
level use of
sold is a smaller task due to
level use of
materials required to earn
( 1,000 tyres @ $ 52
each)
( See note below)
Profit and Loss Statement
For the Period ended Year One
Where a business is a service business, that is, you are selling services not goods or
products, then the profit and loss statement will generally not have a cost of goods sold
calculation. In some instances, where labour costs can be directly attributed to sales, then
you may consider including these costs as a cost of goods (services) sold.
Joes Cost of Goods Calculation
Opening Stock Nil
Add Stock Purchased during the year $34,320 (1100 tyres @ 31.20 each)
Equals Stock available to sell $34,320
Less Stock on hand at end of year $ 3,120 (100 tyres @ 31.20 each)
Cost of Goods Sold $31,200
Note; Cost of Goods Sold calculation:
Towards the end of the year, Joe manages to purchase 100 more tyres on credit from his
supplier for an order in the new year. This leaves him with $3,120 of stock on hand at the
end of the year.
Joes Motorbike Tyres
Small Business Victoria: Information sheet
Profit & Loss Statement
Jan 13 Feb 13 Mar 13 Apr 13 May 13 Jun 13 Jul 13 Aug 13 Sep 13 Oct 13 Nov 13 Dec 13
Sales
Sale of goods/services
Sundry Income (e.g. Commission earned,
frachise fees etc.)
Etc.
Total Sales 0 0 0 0 0 0 0 0 0 0 0 0
Less Discounts/Commissions
Sales Discounts given
Sales Commissions paid
Total Discounts/ Commissions 0 0 0 0 0 0 0 0 0 0 0 0
Total Net Income 0 0 0 0 0 0 0 0 0 0 0 0
Opening Stock
Stock Purchased
0 0 0 0 0 0 0 0 0 0 0 0
Less Closing Stock
Total Cost of Sales 0 0 0 0 0 0 0 0 0 0 0 0
Gross Profit 0 0 0 0 0 0 0 0 0 0 0 0
Bank charges
Credit card commission
Consultant fees
Office Supplies
License fees
Business insurance
Etc.
Total General & Administrative 0 0 0 0 0 0 0 0 0 0 0 0
Advertising
Promotion - General
Promotion - Other
Etc.
Total Marketing & Promotional 0 0 0 0 0 0 0 0 0 0 0 0
Newspapers & magazines
Parking/Taxis/Tolls
Entertainment/Meals
Travel/Accomodation
Laundry/dry cleaning
Cleaning & cleaning products
Sundry supplies
Equipment hire
Etc.
Total Operating Expenses 0 0 0 0 0 0 0 0 0 0 0 0
How to use it: Give careful thought to the headings. Expand the sales income and expenses area if your business has distinct categories (e.g. a restaurant may have food sales and beverage sales listed separately
and cost of sales for each also separated).
General & Administrative
Marketing & Promotional
Operating Expenses
Month
Income
Cost of Sales
Expenses
Fuel
Vehicle service costs
Tyres & other replacement costs
Insurance
Registrations
Total Motor Vehicle Expenses 0 0 0 0 0 0 0 0 0 0 0 0
Domain name registration
Hosting expenses
etc
Total Website Expenses 0 0 0 0 0 0 0 0 0 0 0 0
Permanent
Salaries/Wages
PAYE
Superannuation
Other - Employee Benefits
Recruitment costs
Total Perm. Employment Expenses 0 0 0 0 0 0 0 0 0 0 0 0
Casual
Salaries/Wages
PAYE
Superannuation
Other - Employee Benefits
Recruitment costs
Total Casual Employment Expenses 0 0 0 0 0 0 0 0 0 0 0 0
Workcover Insurance
Total Employment Expenses 0 0 0 0 0 0 0 0 0 0 0 0
Electricity/Gas
Telephones
Property Insurance
Rates
Rent
Repair & maintenance
Waste removal
Water
Etc.
Total Occupancy Costs 0 0 0 0 0 0 0 0 0 0 0 0
Total Other Expenses 0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
Month Net Profit / (Loss) 0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0 Total Year to Date Net Profit / (Loss)
Total Expenses
Employment Expenses
Motor Vehicle Expenses
Website Expenses
Other Expenses
Occupancy Costs
Small Business Victoria: Information sheet
Profit & Loss Statement
Jan 13 Feb 13 Mar 13 Apr 13 May 13 Jun 13 Jul 13 Aug 13 Sep 13 Oct 13 Nov 13
Income
Total Sales 0 0 0 0 0 0 0 0 0 0 0
Less Total Disc/Comm 0 0 0 0 0 0 0 0 0 0 0
Total Net Income 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0
Gross Profit 0 0 0 0 0 0 0 0 0 0 0
Expenses
General & Administrative 0 0 0 0 0 0 0 0 0 0 0
Marketing & Promotional 0 0 0 0 0 0 0 0 0 0 0
Operating Expenses 0 0 0 0 0 0 0 0 0 0 0
Motor Vehicle Expenses 0 0 0 0 0 0 0 0 0 0 0
Website Expenses 0 0 0 0 0 0 0 0 0 0 0
Total Employment Expenses 0 0 0 0 0 0 0 0 0 0 0
Occupancy Costs 0 0 0 0 0 0 0 0 0 0 0
Other Expenses 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0
Monthly Net Profit / (Loss) 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0
Total Expenses
How to use it: Give careful thought to the headings. Expand the sales income and expenses area if your business has distinct categories (e.g. a restaurant may have food sales and
beverage sales listed separately and cost of sales for each also separated).
Month
Total Year to Date Net Profit
/ (Loss)
Less Total Cost of Gooods Sold
#DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
#DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
#DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
#DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Profit and Loss Ratios
Mark Up
((Net Income Less Cost of Goods Sold) /
(Cost of Goods Sold)) x 100
Break Even (
Expenses/
((1-(Cost of Goods Sold/ Net Income))
Gross Margin
(Gross Profit / Net Income)
Net Margin (Net
Profit / Net Income)
Dec 13
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
Cash $5,100
Debtors $18,000
Stock $3,120
$26,220
Computer $5,500
Store Fit Out $8,100
$28,600
$54,820
Credit Card $5,500
Creditors $4,120
$9,620
$9,620
$45,200
Owners Funds $40,000
Current Year Profit $5,200
$45,200
TOTAL LIABILITIES
NET ASSETS
Shareholders Equity
TOTAL SHAREHOLDERS EQUITY
Non-current Liabilities
Total Non-current Liabilities
Total Current Assets
Non-current Assets
Office Equipment $15,000
Total Non-current Assets
TOTAL ASSETS
Current Liabilities
Total Current Liabilities
Joes Motorbike Tyres
Balance Sheet
As at end of Year One
Current Assets
Small Business Victoria: Information sheet
Start of
Business Jun 13 Dec 13
General
Rates
Workcover
Insurance
Etc.
Total Prepaid expenses 0 0 0
Tyres
Parts
Etc.
Total Inventory 0 0 0
0 0 0
Computer
Store Fit Out
Office Equipment
Leasehold
Buildings & improvements
Furniture & Fixtures
Etc.
0 0 0
Total Assets 0 0 0
Bank Overdraft
Credit Card Debt
Current Assets
Total Current Assets
Liabilities
Debtors
Inventory
Fixed Assets
Total Fixed Assets
Balance Sheet
Prepare a balance sheet for the start of the business, six months later and then at the end of the first year. Draw
the information from the Profit & Loss Statement and the Cash Flow Statement. A Balance Sheet brings together
the results from the Profit & Loss Statement and the Cash Flow Statement. (Download it from the Financial
Management section of the Business Victoria website at www.business.vic.gov.au.)
This statement shows the financial position of
the business "as at " a point in time
Prepaid Expenses
Cash on hand
How to use it: Fill in the figures below, expanding or reducing the assets, liabilities and shareholders equity areas.
Month
Short term Investments
Other current assets
Assets
Current Liabilities
Creditors
GST collected
Etc.
0 0 0
Motor Vehicle Loan
Equipment Finance
Long term Loans
0 0 0
Total Liabilities 0 0 0
0 0 0
Owners Funds
Retained Earnings
Current Year Profit
0 0 0
#DIV/0! #DIV/0! #DIV/0!
#DIV/0! #DIV/0! #DIV/0!
0 0 0
#DIV/0! #DIV/0! #DIV/0!
#DIV/0! #DIV/0! #DIV/0!
Current Ratio (Current Assets / Current Liabilities)
Quick Ratio ( Current Assets less inventory) / (Current
Liabilities less bank overdraft)
Shareholders Funds ( Equity)
Current portion of long term debt
Net Assets
Debt to Equity Ratio (Total
Liabilities / Total Shareholders Funds)
Total Current Liabilities
Long Term Liabilities
Total Long Term Liabilities
Total Shareholders Funds (Equity)
Balance Sheet Ratios
Working Capital Funds (Current
Assets Less Current Liabilities)
Leverage Ratio (Total Liabilities / Total Assets)
Superannuation
PAYG Witholding Payable
Workcover Insurance Payable
Za period 01. - 31.Juli
Za poslovnicu arija / Bravadiluk 15
Cashflows from Operations
Cash receipts from customers
(enter positive amounts) Cash Sales
Cash collected from customers (debtors)
Funding from Creditors
Stock purchased, not yet paid
Cash paid for
(enter negative amounts) Total Expenses
Inventory (stock)purchases
Funding to Debtors
Sales made not yet collected
Net Cash Flow from Operations -
Investing Activities
Cash receipts from
(enter positive amounts) Sale of property and equipment
Matured Investments
Cash paid for
(enter negative amounts) Purchase of property and equipment
Purchase of investments
Net Cash Flow from Investing Activities -
[42]
Financing Activities
Cash receipts from
(enter positive amounts) Increase in short term debt
Increase in long term debt
Increase in equity (proceeds from owners)
Cash paid for
(enter negative amounts) Repayment of loans
Dividends
Net Cash Flow from Financing Activities -
Net Increase in Cash -
Cash at End of Year -
Cash Flow Statement