Retail Accounting

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Retail Accounting 101: Profit and Loss Statement

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What is a Profit and Loss Statement?

Retail Profit and Loss Statement

Retail 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

  £
Sales 500,000
Cost of Sales 300,000
Gross Profit 200,000
Overheads  
–          Salaries 5,000
–          Advertising 10,000
–          Travel 100
–          Phone 70
–          Sundries 100
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.

–          Forecasting

What else do think is important for a retailer when reviewing their Profit and Loss statement? Please add your comments below.

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Author: retailaccounting

CounterBooks is an online retail accounting management suite which is used by retailers across the world.

One thought on “Retail Accounting 101: Profit and Loss Statement

  1. simple and understandable

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