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Example profit and loss statement

What is a profit and loss statement?


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.
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 materials required to earn the income.
The image below shows how profit and loss are calculated.

Tip: Regularly produce profit and loss information (monthly) and compare against previous
months activities to ensure your profit expectations are being met.
Hint: Only those businesses that have goods (products) to sell will use the calculation of cost of
goods sold

Joes Motorbike Tyres


Profit and Loss Statement
For the Period ended Year One
Income
Sales
Total Sales
Cost of Goods Sold
Opening Stock
Stock Purchases
Less Closing Stock

Total Cost of Goods Sold(COGS)


Gross Profit
Expenses

52000
52000
$

34320
3120

31200
20800

Advertising
Bank Service Charges
Insurance
Payroll
Professional Fees (Legal, Accounti
Utilities & Telephone
Other: Computer Software
Expenses total

Net Profit before Tax

500
120
500
13000
200
800
480
15600

5200

Note; Cost of Goods Sold calculation:

Towards the end of the year, Joe manages to purchase 100 more tyres on credit from his sup
order in the new year. This leaves him with $3,120 of stock on hand at the end of the year.
Joes Cost of Goods Calculation
Opening Stock
Nil
Add Stock Purchased during the year

$34,320

Equals Stock available to sell

$34,320

Less Stock on hand at end of year

Cost of Goods Sold

$3,120

$31,200

Where a business is a service business, that is, you are selling services not goods or product
profit and loss statement will generally not have a cost of goods sold calculation. In some ins
where labour costs can be directly attributed to sales, then you may consider including these
cost of goods (services) sold.

( 1,000 tyres @ $ 52 each)

( See note below)

e tyres on credit from his supplier for an


and at the end of the year.

(1100 tyres @ 31.20 each)

(100 tyres @ 31.20 each)

services not goods or products, then the


sold calculation. In some instances,
may consider including these costs as a

Profit and Loss Statement


Instructions
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
Jan 13
Feb 13
Mar 13
Apr 13
May 13
Jun 13
Jul 13
Aug 13
Sep 13
Oct 13
Nov 13
Dec 13

Income
Sales
Sale of goods/services
Sundry Income (e.g. Commission earned,
frachise fees etc.)
Etc.
Total Sales
Less Discounts/Commissions
Sales Discounts given
Sales Commissions paid
Total Discounts/ Commissions
Total Net Income
Cost of Sales
Opening Stock
Stock Purchased
Less Closing Stock
Total Cost of Sales
Gross Profit
Expenses
General & Administrative
Bank charges
Credit card commission
Consultant fees
Office Supplies
License fees
Business insurance
Etc.
Total General & Administrative
Marketing & Promotional
Advertising
Promotion - General
Promotion - Other
Etc.
Total Marketing & Promotional
Operating Expenses
Newspapers & magazines
Parking/Taxis/Tolls
Entertainment/Meals
Travel/Accomodation
Laundry/dry cleaning
Cleaning & cleaning products
Sundry supplies
Equipment hire
Etc.
Total Operating Expenses
Motor Vehicle Expenses

###

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$

Fuel
Vehicle service costs
Tyres & other replacement costs
Insurance
Registrations
Total Motor Vehicle Expenses
Website Expenses
Domain name registration
Hosting expenses
etc
Total Website Expenses
Employment Expenses
Permanent
Salaries/Wages
PAYE
Superannuation
Other - Employee Benefits
Recruitment costs
Total Perm. Employment Expenses
Casual
Salaries/Wages
PAYE
Superannuation
Other - Employee Benefits
Recruitment costs
Total Casual Employment Expenses
Workcover Insurance
Total Employment Expenses
Occupancy Costs
Electricity/Gas
Telephones
Property Insurance
Rates
Rent
Repair & maintenance
Waste removal
Water
Etc.
Total Occupancy Costs
Other Expenses
Add an expense description here
Add an expense description here
Add an expense description here
Add an expense description here
Add an expense description here
Add an expense description here
Add an expense description here
Total Other Expenses
Total Expenses
Month Net Profit / (Loss)

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Total Year to Date Net Profit / (Loss)

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Instructions
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).

Profit & Loss Statement


Month
Income
Total Sales
Less Total Disc/Comm
Total Net Income
Less Total Cost of Gooods Sold

Gross Profit
Expenses
General & Administrative
Marketing & Promotional
Operating Expenses
Motor Vehicle Expenses
Website Expenses
Total Employment Expenses
Occupancy Costs
Other Expenses
Total Expenses
Monthly Net Profit / (Loss)
Total Year to Date Net Profit /
(Loss)

Jan 13

Feb 13

Mar 13

Apr 13

May 13

Jun 13

Jul 13

Aug 13

Sep 13

Oct 13

Nov 13

Dec 13

0
0
0
0
0

0
0
0
0
0

0
0
0
0
0

0
0
0
0
0

0
0
0
0
0

0
0
0
0
0

0
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0
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0
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0
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0
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0
0
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0
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0
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0
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0
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0
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0
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0
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0
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0
0
0
0
0

0
0
0
0
0
0
0
0
0

0
0
0
0
0
0
0
0
0

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Profit and Loss Ratios


Gross Margin
(Gross Profit / Net Income)
Net Margin
(Net Profit / Net Income)

Mark Up
((Net Income Less Cost of Goods Sold) /
(Cost of Goods Sold)) x 100

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Break Even
( Expenses/((1-(Cost of Goods Sold/ Net
Income))

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Example Balance Sheet


Joes Motorbike Tyres
Balance Sheet
As at end of Year One
Current Assets
Cash
Debtors
Stock
Total Current Assets

$5,100
$18,000
$3,120
$

26,220.00

Non-current Assets
Computer

$5,500

Store Fit Out

$8,100

Office Equipment

$15,000

Total Non-current Assets


Total Assets
Current Liabilities

$28,600
$54,820

Credit Card

$5,500

Creditors

$4,120

Total Current Liabilities

$9,620

Non-current Liabilities
Total Non-current Liabilities
Total Liabilities

$9,620

Net Assets
Shareholders Equity
Owners Funds
Current Year Profit
Total Shareholders' Equity

$45,200
$40,000
$5,200
$45,200

Balance Sheet
Instructions
The Balance Sheet shows the financial position of the business as at a point in time
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 from the Business Victoria website at http://www.business.vic.gov.au.)
Fill in the figures below, expanding or reducing the assets, liabilities and shareholders equity areas.

Start of
Business

Month

Jun 13

Assets
Current Assets
Cash on hand
Debtors
Prepaid Expenses
General
Rates
Workcover
Insurance
Etc.
Total Prepaid expenses
Inventory
Tyres
Parts
Etc.
Total Inventory
Short term Investments
Other current assets
Total Current Assets
Fixed Assets
Computer
Store Fit Out
Office Equipment
Leasehold
Buildings & improvements
Furniture & Fixtures
Etc.
Total Fixed Assets
Total Assets

$0.00
$0.00

$0.00
$0.00

$0.00
$0.00
$0.00
$0.00
$0.00
$

$0.00
$0.00
$0.00
$0.00
$0.00
-

$
$
$
$

$0.00
$0.00
$0.00
-

$
$
$
$

$0.00
$0.00
$0.00
-

$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$

$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
-

$
$
$
$
$

$
$
$
$
$

Liabilities
Current Liabilities
Bank Overdraft
Credit Card Debt
Creditors
GST collected
Superannuation

PAYG Witholding Payable


Workcover Insurance Payable
Current portion of long term debt
Etc.
Total Current Liabilities
Long Term Liabilities
Motor Vehicle Loan
Equipment Finance
Long term Loans
Total Long Term Liabilities

$
$
$
$
$

$
$
$
$
$

$
$
$
$

$
$
$
$

Total Liabilities

Net Assets

$
$
$

$
$
$

Shareholders Funds ( Equity)


Owners Funds
Retained Earnings
Current Year Profit
Total Shareholders Funds (Equity)

Balance Sheet Ratios


Current Ratio (Current Assets / Current Liabilities)

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Quick Ratio ( Current Assets less inventory) / (Current Liabilities less bank overdraft)
Working Capital Funds
(Current Assets Less Current Liabilities)

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Leverage Ratio (Total Liabilities / Total Assets)

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Debt to Equity Ratio


(Total Liabilities / Total Shareholders Funds)

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Dec 13

$0.00
$0.00

$0.00
$0.00
$0.00
$0.00
$0.00
-

$
$
$
$

$0.00
$0.00
$0.00
-

$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
-

$
$
$
$
$

$
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$
$

$
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$
$

$
$
$

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0
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Example cashflow statement

Cash Flow Statement


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
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

$
$

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$

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$

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$

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$
$

Date and starting cash


For the Year Ending
Cash at Beginning of Year