Bercy N. Quick and Easy

A Quick & Easy Way to Read & Understand a Profit Loss Statement


Let’s start with what is a profit/loss statement is. According to ehow.com, A profit and loss statement shows a business how much it is profiting. It subtracts all its expenditures from all its income to generate a figure that shows the pure profit of the business over a period of a year, quarter or month. Now that we understand the concept of subtracting what you spend from what you make, now we can go into reading the statement.
The first thing that you need to do as a manager or accountant is look at the section titled sales, this is going to be where the business sales are listed. Then find where it says operating expenses, this is going to list all the expenses that your business had to make in order to operate. This includes wages, rent, any products it had to buy and more.
Next is the net profit, it tells you the total amount your business profited during that period of time. This number can be positive, if your business did well, or a negative number if your business spent more than it brought in.
You also need to understand what the Depreciation section is, this is largely for tax purposes. Most businesses need to show how the equipment and supplies that they own over the course of a year have diminished in value, to determine the current value of your business.
And lastly you need to take into account any income or expenses that have nothing to do with what your business does, this may include any investment, the purchase or sale of property, and interest payments or revenue.
I hope that this has helped you understand the profit loss statement, so that you can determine how to increase your profits and decrease you expenses.


http://www.ehow.com/how_2363851_understand-profit-loss-statement.html
http://www.ehow.com/how_2363824_read-profit-loss-statement.html