Page 253 - merged.pdf

CHAPTER 8 MASTERING YOUR MONEY

of how well it is performing and how well it is meeting its
financial goals.

These are the three report cards that we must focus on
constantly. They are 1) Profit & Loss Statement, 2) Balance
Sheet and 3) Statement of Cash Flows.

Report Card 1: The Profit & Loss Statement

The Profit & Loss Statement (also known as the Income
Statement) tells us how much money our business is
generating (Sales Revenue), how much money it is spending
(Total expenses) and what is left over as profits. It is calculated
over a period of time, such as a quarter (3 months) and over
a year.

This is what a simplified P&L Statement looks like. Let’s look
at the key components of this statement and what you must
pay attention to in building a successful business.

FASHION PTE LTD ANNUAL PROFIT & LOSS STATEMENT

Sales Revenue $1,000,000
Deduct:
Cost of Goods Sold (COGS) ($400,000)
Gross profit $600,000

Less: Fixed Costs ($50,000)
Sales & marketing ($200,000)
Salaries ($36,000)
Transport ($7,200)
Telecommunications ($36,000)
Rental ($16,800)
Depreciation $346,000
Total

Income before taxes $254,000
Less: Income Taxes ($50,800)
Net Income $203,200

* Figures in bracket are negative

244 SECRETS OF BUILDING MULTI-MILLION DOLLAR BUSINESSES