The Purpose of Profit Loss Statement for Our Business
Brief Development of Business with Profit Loss Statement
No one who runs a business wants to get bankrupt. To keep track of your earnings and able to face some problems in the future, you need to know more and understand about profit loss statement which is one of the financial statements besides the balance sheet and cash flow statements. Let’s see the difference between those. A balance sheet provides a report about the company’s assets, liabilities, and shareholder equity. This will be used to compute the rate of return and evaluate the capital structure of the company. Meanwhile, cash flow refers to the sum of the cash amount and equivalents which enter and leave the company.
A for-profit loss statement informs about the sum of revenue, cost, and expense in a period which is usually in a fiscal quarter or year. In shorts, this kind of statement explains the ability and inability of a company in generating profit whether by decreasing the cost, increasing the revenue, or even both. Income statements refer to the same things as profit loss. It is also known as the statement of operation, expense statement, earnings statement, and statement of financial result or income. This statement will help you to get the investor and loan officer because the ability to pay back the investment and loan is drawn clearly in this kind of financial statement.
Other Samples of Profit Loss Statement :
What you write in the statement template plays important role in the result. Some crucial things here have to be written by you to get a clear profit loss statement that can understand easily. There are five sections in the statement. They are income, cost of goods sold or COGS, expenses, other income/expenses, and net income. You can also add gross profit and net operating income. Other income examples here are divided income, interest earned, investment income, one-time inform from an unusual source, meanwhile for the other expenses example are a reimbursable expense, taxes or penalties, depreciation or amortization, and one-time extraordinary expense like legal fees. If you are interested in this type of statement template, you can download one for free at the bottom of this page.
Profit Loss Statement Template | Excel – download