What is a Profit and Loss Statement?
A Profit and Loss (P&L) statement summarises the financial performance of a business over time. It is a useful tool to assess how well your retail business is doing. Essentially you are calculating your profit or loss within a certain period.
Key elements are:
Sales – The amount of money you have made from selling your product.
Cost of Sales – The cost of making the product or providing the service before anything else is deducted.
Gross Profit – The sales less the cost of sales.
Overheads – Operating costs of the business such as travel, advertising, phone etc.
Net profit – Net profit is what you have left over after everything has been deducted. This includes overheads and taxes.
Example Profit and Loss Statement
|Cost of Sales||300,000|
|Net Profit (before tax)||184,730|
It is important to assess your retail performance at regular intervals however the detail required will vary between retail companies.
What are the benefits to your retail business?
– Compare your predicted performance with your actual performance.
– Determine growth potential within retail.
– Assess your retail business performance with retail industry norms.
What else do think is important for a retailer when reviewing their Profit and Loss statement? Please add your comments below.