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Profit And Loss Paper

627 words - 3 pages

Profit and Loss Statement Paper

Profit and Loss Statement Paper
A profit and loss statement is a statement that shows a company’s revenue and expenses over a particular period of time. A profit and loss statement covers net sales, cost of goods sold, gross profit, and net operating income to calculate how much money a business made or lost (net income). It is important for any business to keep an accurate accounting of all transactions to ensure an accurate profit and loss statement. Kudler Fine Foods, for example, has their profit and loss statement from the year ending December 31st, 2003 made publically available. Breaking down this statement will allow us to see how this company performed in 2003.
Net Sales
Net sales are calculated by taking the total amount of revenue generated from sales and subtracting sales returns and allowances. Sales returns are the loss a company receives from ...view middle of the document...

Buying products to resell has a more straightforward COGS. Manufacturing your own goods to sell incorporates cost of materials, labor, packaging, and logistics. At the beginning of 2013, Kudler Fine Foods had a total inventory carryover worth $467,890. They added to their inventory quite a lot, and incurred costs because of this. Factoring in purchases, labor, shipping, and indirect expenses, Kudler Fine Foods spent $8,903,921 in 2013. At years end, they had an inventory carryover worth $429,090. This means they sold more goods than they added that year. The total COSG in 2013 was $8,474,831. Subtracting that number from the net sales, and Kudler is left with a Gross Profit of $2,321,369.
Net Operating Income
Net operating income represents a business’s profits after the expenses to operate the company are deducted. Expenses for Kudler Fine Foods in 2013 resulted from items such as advertising, bad debts and charges, bank charges, charity, bonuses, outsourcing, fees, wages, vehicle expenses, and lease costs. All the operating expenses for Kudler Fine foods totaled $1,652,419 in 2013. Subtracting that from the gross profit leaves Kudler Fine Foods with a net operating income of $668,950 for 2013.
Net Income
Net income is the total amount of money a business made during a certain time period after all factors are considered. Additional items considered, called “other income” after the net operating income are gains or losses on sales of company assets and interest income. In 2013, Kudler Fine Foods had an “other income” total of $7,845 dollars, all resulting from interest income. This leaves a net income for 2013 at a total of $676,795. All in all, this number indicates that the operating costs and costs of sold goods is too high. Generating sales of over ten million dollars, yet only having $676,795 worth of net income, is not a good sign. Changes need to be made to lower the expenses so shareholders can benefit with a greater bottom line.

Raiborn, Cecily (2010) Core Concepts of Accounting, Second Edition, Ch. 9. Located on the student website.
Kudler Fine Foods Income Statement, 2007, 2010, 2011 Apollo Group, INC. Located on the student website.

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