Profit & Loss Statement
Contents
What is a profit & loss statement?
Create a profit & loss statement
A profit and loss statement shows your company's financial performance by revealing how much money it made, how much it spent, and how much it earned as profit.
It provides valuable information for business owners, investors, and other stakeholders to understand the company's financial health and make informed decisions. A profit and loss statement is usually required for filing at Companies House.
What is a profit & loss statement?
What is a profit & loss statement?
A profit and loss statement, also known as an income statement, is a financial report that shows your company's revenue, expenses, and profit over a specific period of time, such as a month or a year.
The statement starts with your company's revenue, which is the money it earns from sales. This is then subtracted by your company's expenses, which are the costs associated with running the business, such as rent, salaries, and supplies. The result is your company's net profit or loss.
Create a Profit & Loss Statement
Create a Profit & Loss Statement
To create a profit and loss statement, follow these steps:
Determine the time period: The profit and loss statement shows a company's revenue, expenses, and profit over a specific period of time, such as a month or a year. Choose a time period that is relevant to your purposes.
List revenue: On the top of the profit and loss statement, list all of the company's revenue, such as sales, service fees, and interest income.
Calculate total revenue: Add up all of the revenue to find the total amount of money the company earned.
List expenses: Below the revenue, list all of the company's expenses, such as cost of goods sold, marketing expenses, and rent. Expenses should be categorised in a logical manner, such as by type or function.
Calculate total expenses: Add up all of the expenses to find the total amount of money the company spent.
Calculate net profit: To find the company's net profit, subtract the total expenses from the total revenue. If the result is positive, the company made a profit. If the result is negative, the company had a loss.
Finalise the profit and loss statement: Make sure that the profit and loss statement is neat and easy to read, with clear headings and labels for each section. If desired, you can include additional information, such as a comparison to prior periods or a summary of key financial ratios.
Present the profit and loss statement: The final profit and loss statement should provide a clear picture of the company's financial performance and help stakeholders understand how much money the company made, how much it spent, and how much it earned as profit.