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Profit and loss statement or the income statement is a financial report telling the financial activity including costs, revenues, and expenses in certain periods. Usually, the report will be done per year or fiscal quarter. This report is very important because we will know the company performance regarding with knowing the costs reducing, revenue and others. The release of this report also can be done quite which also includes the cash-flow statement and balance sheet. Therefore, a profit and loss statement template is highly suggested because this eases the work.
Breaking Down The Profit and Loss Statement Template
As one of the important financial statement, it is important to compare the result from period to period which this can help the business owner find out what works effectively in a business. Keep in mind that profit and loss statement template will be different with the balance sheet. The balance sheet gives us a snapshot of what the company has in a certain moment. Besides, a comparison between the income statement and the cash flow statement is important to have a deep financial analysis.
Why Do We Need the Profit and Loss Account?
Generally, we know the profit and loss account is used to analyze the company financial health in suitable metrics. The lists below will explain why each business owner needs to make it.
This is an essential information if you want to apply a funding proposal to a bank or other funding resources. By giving the profit and loss statement, this will help you demonstrate the ability of your business to the creditors. In short, this is an accurate way to determine how much money they can lend to you based on your ability to avoid any dispute in the future and keep your financial flow healthy. This will also give the creditor confidence in lending some fund.
This is a great way to predict the trend of your business because you can see when you have the highest revenue and the lowest one. By this way, this helps you decide certain strategies to increase the revenue. This also helps you decide when to implement the strategies including hiring new employees, making a purchase and so on.
The break-even point is the most important thing you should do with the business. Writing the financial report through profit and loss statement template help you see the shortfall that leads to loses. In this case, you then can decide when to cut some expenses so you can meet the break-even point.
What does Information need To Be Fill Out In the Profit and Loss Statement Template?
- Net Sales – It tells the sales in a period of time including the expenses, refunds, returns and so on.
- Cost of Sales – This is important for the retailers which the report will include all of the selling, administrative overhead and also marketing.
Regarding the information above, we believe that you need a profit and loss statement template that can ease you to do the work properly and effectively