Analyzing Your Profit and Loss Statement

  • Analyzing Your Profit and Loss Statement

    Analyzing Your Profit and Loss Statement

    This is the first report you should be reviewing every month and comparing it to last month and last year. Once your books are reconciled this report can give you good information to make future decisions. Your profit and loss statement reports the total income of your business minus the expenses. It gives you a baseline of the health of your business.

    It measures the business on these 3 performances:

    1. Generating income from sales
    2. Managing expenses
    3. Sustaining a healthy profit margin

    Once you have reviewed the information you can use it to make decisions in many areas of the company, such as:

    • Setting prices (increasing or providing discounts)
    • Developing sales targets
    • Forecasting growth
    • Obtaining loans or finding investors
    • Ability to get tax planning advice

    Applying for a loan? A profit and loss statement will be one of the documents that will be needed. Thinking about finding investors? They will also want a profit and loss statement to see if your company is financially sound.

    By analyzing your profit and loss statement, you can identify areas where your business is doing well and areas where it needs improvement. This can help you make informed decisions about how to grow your business and improve its profitability. Do you want to learn more about what reports to review or maybe learn more about what your reports really say about your business?

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