Example profit and loss statement

What is a profit and loss statement?

The profit and loss statement is a summary of a business’s 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
month’s 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
Joe’s Motorbike Tyres
Profit and Loss Statement
For the Period ended Year One
Income
Sales 52000
Total Sales 52000
Cost of Goods Sold
Opening Stock $ -
Stock Purchases 34320
Less Closing Stock 3120
Total Cost of Goods Sold(COGS) 31200
Gross Profit 20800
Expenses
Advertising 500
Bank Service Charges 120
Insurance 500
Payroll 13000
Professional Fees (Legal, Account 200
Utilities & Telephone 800
Other: Computer Software 480
Expenses total 15600
Net Profit before Tax 5200

Note; Cost of Goods Sold calculation:

Towards the end of the year, Joe manages to purchase 100 more tyres on credit from his supp
order in the new year. This leaves him with $3,120 of stock on hand at the end of the year.
Joe’s 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 $3,120

Cost of Goods Sold $31,200
Where a business is a service business, that is, you are selling services not goods or products
profit and loss statement will generally not have a cost of goods sold calculation. In some inst
where labour costs can be directly attributed to sales, then you may consider including these c
cost of goods (services) sold.
 ( 1,000 tyres @ $ 52 each)

( See note below)

re tyres on credit from his supplier for an

hand 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 19 Feb 19 Mar 19 Apr 19 May 19 Jun 19 Jul 19 Aug 19 Sep 19 Oct 19 Nov 19 Dec 19
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
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) $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -

Total Year to Date Net Profit / (Loss) $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -

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 Jan 19 Feb 19 Mar 19 Apr 19 May 19 Jun 19 Jul 19 Aug 19 Sep 19 Oct 19 Nov 19 Dec 19
Income
Total Sales 0 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 0
Total Net Income 0 0 0 0 0 0 0 0 0 0 0 0
Less Total Cost of Gooods Sold 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
Expenses
General & Administrative 0 0 0 0 0 0 0 0 0 0 0 0
Marketing & Promotional 0 0 0 0 0 0 0 0 0 0 0 0
Operating Expenses 0 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 0
Website Expenses 0 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 0
Occupancy Costs 0 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
Total Expenses 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
Total Year to Date Net Profit /
(Loss) 0 0 0 0 0 0 0 0 0 0 0 0
Profit and Loss Ratios

Gross Margin
(Gross Profit / Net Income) #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Net Margin
(Net Profit / Net Income) #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Mark Up
((Net Income Less Cost of Goods Sold) /
(Cost of Goods Sold)) x 100 #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

Break Even
( Expenses/((1-(Cost of Goods Sold/ Net
Income)) #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Example Balance Sheet
Joe’s Motorbike Tyres
Balance Sheet
As at end of Year One
Current Assets
Cash $5,100
Debtors $18,000
Stock $3,120
Total Current Assets $ 26,220.00
Non-current Assets
Computer $5,500
Store Fit Out $8,100
Office Equipment $15,000

Total Non-current Assets $28,600

Total Assets $54,820
Current Liabilities

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 $45,200
Shareholders’ Equity
Owners’ Funds $40,000
Current Year Profit $5,200
Total Shareholders' Equity $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
Month Business Jun 19
Assets
Current Assets
Cash on hand $0.00 $0.00
Debtors $0.00 $0.00
Prepaid Expenses
General $0.00 $0.00
Rates $0.00 $0.00
Workcover $0.00 $0.00
Insurance $0.00 $0.00
Etc. $0.00 $0.00
Total Prepaid expenses $ - $ -
Inventory
Tyres $0.00 $0.00
Parts $0.00 $0.00
Etc. $0.00 $0.00
Total Inventory $ - $ -
Short term Investments $ - $ -
Other current assets $ - $ -
Total Current Assets $ - $ -
Fixed Assets
Computer $0.00 $0.00
Store Fit Out $0.00 $0.00
Office Equipment $0.00 $0.00
Leasehold $0.00 $0.00
Buildings & improvements $0.00 $0.00
Furniture & Fixtures $0.00 $0.00
Etc. $0.00 $0.00
Total Fixed Assets $ - $ -

Total Assets $ - $ -
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) #DIV/0! #DIV/0!

Quick Ratio ( Current Assets less inventory) / (Current Liabilities less bank overdraft) #DIV/0! #DIV/0!
Working Capital Funds
(Current Assets Less Current Liabilities) 0 0

Leverage Ratio (Total Liabilities / Total Assets) #DIV/0! #DIV/0!

Debt to Equity Ratio
(Total Liabilities / Total Shareholders Funds) #DIV/0! #DIV/0!
 Dec 19

$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
$ -

$ -

$ -
$ -
$ -
$ -
$ -
$ -
$ -
$ -
$ -
$ -
 $ -
$ -
$ -
$ -
$ -

$ -

$ -
$ -
$ -

$ -

#DIV/0!

#DIV/0!

#DIV/0!

#DIV/0!
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 amountsTotal 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 amountsPurchase 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 amountsRepayment of loans $ -
Dividends $ -
Net Cash Flow from Financing Activities $ -
Net Increase in Cash $ -
Cash at End of Year $ -
Date and starting cash
For the Year Ending
Cash at Beginning of Year