Profit and loss statement of the enterprise: structure, how to fill in, analysis
The profit and loss (P&L) plan or profit and loss forecast (financial results, income and expenses) includes:
? proceeds (income) from the sale;
? tax and other deductions.
Based on these indicators, the profit remaining at the disposal of the company / project is calculated. According to P&L data, it is possible to establish whether the company's activities are profitable. The ultimate goal of this document is to show how profits will change and form (Table 7, Fig. 5).
Fig. 5. Profits and losses of the project graphically (example)
Table 7 Main items of the profit and loss plan
It should be borne in mind that the financial result (profit or loss) is just an assessment of the company's performance, which largely depends on the applicable cost allocation and revenue recognition rules. If all the income and expenses of the company / project would arise simultaneously with their actual payment, and there would be no depreciable property and loan movement, then P&L would coincide with the DDS.
If you prepare P&L in the context of individual products, you can compare products by profitability in order to determine the feasibility of their further production.
This text is an introductory fragment.
Minimum tax and recognition of losses
2. ... ... Minimum tax and recognition of losses Of course, every reasonable entrepreneur wants to pay tax in the least amount. And if he pays a single tax on the difference between income and expenses, then this can be achieved in two ways - either by reducing the amount of income, or
Building a successful and constantly developing company is impossible without proper organization of accounting and constant monitoring of current socio-economic indicators. In order not to get confused in a large amount of information, to structure and systematize all the data, special reporting forms were invented. This is, first of all, the balance sheet, cash flow statement and income statement. The latter will be the subject of today's article.
What is the form of the profit and loss statement and what does it reflect in the company
Profit and Loss Statement (Form 2) is a standardized document used to maintain accounting activities in enterprises to assess the financial result. The report is compiled in tabular form in accordance with domestic accounting and reporting standards.
In various articles and specialized literature, you can still find such a concept as “statement of financial results” - this is another name for the income statement (P&L). Therefore, if you come across such an expression, keep in mind that we are talking about an OP&U.
Balance sheet and income statement in the structure of IFRS
In accordance with International Financial Reporting Standards (IFRS), the main accounting documents for enterprises of all forms and types of activities are such documents as the balance sheet and the profit and loss statement.
Moreover, according to the legislation of the Russian Federation and the requirements of IFRS, the statement of financial results must be generated and submitted to the controlling authorities within a clearly specified time frame - before March 30 of the year following the reporting year.
The balance sheet and profit and loss account are the main documents that auditors are guided by when conducting audits. It is the analysis of these documents that makes it possible to assess the financial and economic condition of the enterprise, calculate the indicators of liquidity, financial stability, etc.
At the same time, the preparation of this reporting document requires special training and usually this activity at the enterprise is carried out by a full-time accountant or specialist of an outsourcing company. But if you have just conceived the creation of an enterprise and do not have the opportunity to immediately hire an accountant, we still recommend that you contact the specialists. This is due to the fact that even when planning future activities, it is necessary to draw up an approximate version of the Report in order to understand what final results can be expected.
If you intend to develop a business plan yourself and want to learn how to embed a profit and loss statement into the overall structure of a business plan, then we advise you to download a ready-made sample. Having such a “template” will make it easier to understand how to make a complete and organized business plan.
How is the profit and loss statement compiled and what the structure of the income statement shows
Any reporting document begins with a so-called “header”. Usually, basic information is indicated there, making it easy to navigate by the time and object of the report.
The following fields must be filled in in the header of the profit and loss account:
Promotion of goods to the market means the use of various methods by which the seller
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Share or share capital. share capital - the capital of a joint stock company
Financial plan Profit and loss statement
Profit and Loss Statement A statement showing the volume of sales, costs and profits of an organization for a specified period. A typical income statement is presented in the table. I. Income and expenses from ordinary activities 1. Revenue (net) from the sale of goods, products, works, services (net of value added tax, excise taxes and similar mandatory payments), 2. The cost of goods, products, works, services sold, 3. Gross profit, 4. Business expenses, 5. Administrative expenses, 6. Profit (loss) from sales, 7. Other income and expenses8. Interest receivable, 9. Interest payable, 10. Income from participation in other organizations, 11. Other operating income, 12. Other operating expenses, 13. Non-operating income, 14. Non-operating expenses, 15. Profit (loss) before tax, 16. Deferred tax assets, 17. Deferred tax liabilities, 18. Current income tax 19. Net profit (loss) of the reporting period, 20 For reference. 21. Permanent tax liabilities (assets). 22. Basic earnings (loss) per share 23. Diluted earnings (loss) per share
Cash flow plan. The purpose of drawing up a Cash Flow Plan is to plan the actual receipts of funds to the settlement account and actual payments, taking into account the real terms (schedules) for three types of activities: for operating (main production), for investment and financial activities of the printing house. Unlike the profit and loss plan, the cash flow plan reflects the actual receipt of proceeds from the sale of products and services, taking into account the planned types of payment (in fact, on prepayment, on credit, according to complex schemes and delays in the receipt of funds to the current account), according to calculations from suppliers of materials, for the payment of wages to employees of the printing house, for settlements with the budget, for paying bills for electricity, water, heat, etc. The cash flow plan reflects the receipt of all money from all sources, including the sale of shares or received on debt, as well as funds from the sale or liquidation of certain assets.
Formation of reporting financial documents. The financial plan includes three documents: the Profit and Loss Statement, the Balance Plan and the Cash Flow Statement. the income statement reflects the operating activities of the enterprise in the current period of the project. With the help of this report, you can determine the amount of profit received by the company in a certain period of time. The balance sheet reflects the financial condition of the enterprise at the end of the calculated period of time, from the analysis of which it is possible to conclude about the growth of assets and the stability of the financial position of the enterprise implementing the project in a specific period of time. cash flow statement shows the formation and outflow of cash, as well as cash balances of the enterprise in dynamics from period to period.
Contents, tasks and stages of developing a financial plan. 9. Financial plan. Project efficiency indicators This section of the business plan is final and is calculated based on the results of the forecast of production and sales of products. When developing a financial plan, the characteristics and conditions of the environment in which the investment project is supposed to be implemented should be taken into account: tax environment (list of types of taxes, tax rates and timing of their payment, trends); change in the rate of currencies at which the project is calculated; differentiated inflationary characteristics of the environment; start date and time of project implementation, project calculation horizon. The methodological foundations of financial planning and determining the effectiveness of an investment project, as well as the stages of building a financial plan, are widely known. The financial plan includes three documents: the Profit and Loss Statement, the Balance Plan and the Cash Flow Statement. the income statement reflects the operating activities of the enterprise in the current period of the project. With the help of this report, you can determine the amount of profit received by the company in a certain period of time. The balance sheet reflects the financial condition of the enterprise at the end of the calculated period of time, from the analysis of which it is possible to conclude about the growth of assets and the stability of the financial position of the enterprise implementing the project in a specific period of time. cash flow statement shows the formation and outflow of cash, as well as cash balances of the enterprise in dynamics from period to period. Based on the results of the three reports, an analysis of the company's financial resources and the development of a financing scheme for an investment project are carried out. The forms and methods of project financing are diverse. The most used in the practice of industrial enterprises are as follows: - obtaining financial resources by issuing shares (the most common and preferred form of financing in the initial period of the implementation of large projects). The share capital is acquired by issuing ordinary and preferred shares. Often the issue of shares is combined with the issue of debt obligations; - debt financing (purchase of a long-term loan in commercial banks, loans in government agencies, mortgage loans, private placement of debt obligations). When choosing a lending option, it is necessary to take into account the situation on the credit market, the conditions for obtaining loans (loan rate, expiration dates of debt obligations, debt service conditions); - lease financing (for example, when a leasing company purchases fixed assets from a manufacturer and then leases them to a user). With lease financing, project participants can transfer ownership of the entire project or part of it (to the investor, etc.). The amount of equity and debt capital must be sufficient to cover the negative amount of funds at any time of the project. Each of the alternative financing schemes should be calculated and an assessment of the consequences of its application should be given.
Investment project efficiency indicators. The system of indicators of the investment project efficiency is represented by two groups of indicators: indicators of the financial condition of the enterprise and indicators of investment efficiency, calculated at the selected discount rate. The first group of indicators characterizes the efficiency of the enterprise's operational activities during the implementation of the investment project - the profitability of the project, the return on equity, financial performance indicators: liquidity and financial stability. The second group of indicators characterizes the efficiency of investments in the project: - payback period (shows the time of return on invested funds and is used as an indicator characterizing the risk of the project) - net present value of income (absolute value reflecting the scale of the project and the amount of income from new production), - index profitability (characterizes the profitability of the project) - the internal rate of return (a qualitative indicator that characterizes the return on investment), which is the main estimated indicator of the effectiveness of an investment project
Current financial planning is considered as an integral part of the long-term plan and is a specification of its indicators.
Current planning consists in developing a profit and loss plan, a cash flow plan, a planned balance sheet, since these forms of planning reflect the financial goals of the organization (enterprise). All three planning documents are based on the same initial data and must be combined with each other.
Current financial plan documents are drawn up for a period of one year. This is due to the fact that during the year the seasonal fluctuations of the market conditions are mainly equalized. For the accuracy of the result, the planning period is divided into smaller units of measurement: half a year or a quarter.
1. Profit and loss plan
It is advisable to start developing a financial plan with a profit and loss plan. Having the data on the forecast of the volume of sales, you can calculate the required amount of financial resources. This document shows the generalized results of current (economic) activities. Analysis of the ratio of income to expenses allows you to estimate the reserves for increasing the company's equity capital. Another function performed by this document is the calculation of the planned values of various tax payments and dividends.
The development of a profit and loss plan takes place in several stages.
At the first stage, the planned amount of depreciation deductions is calculated, since it is part of the cost price and precedes the planned profit calculations.
At the second stage, the amount of costs is determined, which can be calculated in two ways:
- traditional ;
- cost planning by responsibility centers.
In the first method (traditional), a system of costs is drawn up on the basis of the standards, which includes the main costs of raw materials and materials (in accordance with technical requirements), direct costs of labor costs (scientifically based basic wage rates) and overhead. Standard cost rates are developed based on a specific methodology. The level of the adopted standards makes it possible to identify those areas of the enterprise that hinder its effective functioning and hinder the release of competitive products.
In modern conditions, the process of cost planning by responsibility centers is becoming more widespread. The center of responsibility is each division of the enterprise (plant, department), the head of which is directly responsible for the costs of this division. This method allows for effective control by delegating responsibility to the level of individual departments.
Control and regulation are carried out on the basis of data on specific plans for the production of goods (work, services) in a specific center of responsibility. These targets are called cost items (or line items).
Profit and loss statement is the main document of an enterprise, reflecting its efficiency and effectiveness. It is from this report that analysts and investors can find out what the revenue and costs of the company are and what net profit the company ultimately earned. This report is also called "income statement", and in the statements in English is called incomestatement (literally "income statement").
Analysis of the profit and loss statement allows you to understand:
How efficient is the business: what is the company's profitability.
Dynamics of development and growth of the company.
The company's cost structure - its weaknesses and competitive advantages.
An example of the analysis of the profit and loss statement
For example, let's take the report on financial results of the company MMC Norilsk Nickel. From the point of view of the investor, it is more important to analyze the statements prepared according to IFRS (International Financial Reporting Standards), and not according to RAS (Russian Accounting Standards). The main reason is that it is within the framework of the ISOF that Russian public companies are obliged to consolidate data on all subsidiaries and parent companies that are part of a single business group, which allows us to understand the financial condition of the entire holding, and not individual legal entities.
The Profit and Loss Statement is the very first document in IFRS reporting and looks like this:
Profit and Loss Statement Items
The main purpose of the statement of financial results is to show the efficiency of the company. This report reflects all the company's income for the period, as well as all the company's expenses. As a result, the report shows the company's net profit for the period.
To calculate the net profit, all income items of the report are added and all expense items are deducted from them.