Profits4You

Mark William


Today, we are going to discuss one type of financial statement called the profit and loss statement. A profit and loss statement is a summary of your income and expenses over a certain period of time, usually a quarter or a year. The profit and loss statement is important because it helps you to understand the profitability or financial condition of your company over that certain period of time.

The main components of a profit and loss statement are:

Sales – Constitute the total revenue received from the sale of a good.

Cost of goods sold – These are the costs directly linked to the production of the good.

Gross Profit (Loss) – Results when the cost of goods sold is subtracted from sales revenue. The gross profit represents the profitability that is generated by the sales revenue.

Operating expenses – These are the general and administrative expenses that are incurred in the day-to-day running of your business; some examples are employee salaries, advertising costs, and rent.

Operating Profit – Results when all the operating expenses are subtracted from the gross profit. The operating profit represents the profitability that is generated when the daily operating activities of the business are taken into account.

Other income and expenses – These are earnings or expenses that a business would not normally have in its day-to-day operations. A good example could be rent earned from a property or interest that is paid on long-term debt. The expenses are subtracted from the earnings in this component to arrive at a net figure.

Net profit before taxes – Results when the net figure for other income and expenses is either added or subtracted from the operating profit. Net profit shows how profitable the company is after all the different types of expenses have been deducted, that is, before it pays it’s taxes.

Income taxes – This is the amount of taxes the company is obliged to pay.

Net income (loss) – Results when the income taxes have been subtracted from net profit. If the net income is positive, the company has been profitable over the accounting period. This figure represents the overall profitability of the company when every single cost of the business has been accounted for. The net income is essentially the bottom line and constitutes the amount of money that the company has left at the end of the period.

As a business owner, you should be able to understand how profitable your company is. From the profit and loss statement, you can easily identify which types of costs took the most away from your bottom line and start thinking of ways that you can curb them. The profitability of your company will also be of interest to banks and lenders. A profitable company shows that it is adept at making the most out of borrowed funds and will have less of a problem securing funds in the future. Now that you see how useful it can be to develop your understanding of this type of financial statement, it would definitely be a good idea to do some additional reading up on the subject.

To get a bigger picture of how some of the components of a profit and loss statement can be used in a budget, have a look at my article called “How to Prepare a Budget”.

staceyb_2003


I really would like to start my own business one day but don’t know where to start i wasn’t exactly born with a silver spoon in my mouth but would just like some tips or for you to share your experiences on how you set about with your buisness!! serious answers only please

Powered by Yahoo Answers

GamingGuide.net Team


Although it is not necessary to have a broker for currency trading, some people do choose a managed account for any number of reasons. It may be because they don’t have the time to watch the trends because they are busy working with their other investments, or it may be because a managed account turns over the responsibility for making the right decisions to someone else. Whether it’s a good or bad idea depends on how efficient the manager is that is handling your forex investment account.

A managed forex account is beneficial to the investor who is either inexperienced or doesn’t have the time to continually watch the market. The management company will follow the trends as they develop and make recommendations regarding currency exchanges. Keep in mind that the whole idea behind forex is to buy the currency at the lowest price and sell it at the highest, and with a managed forex account, you are relying on someone else to handle all that for you. This means you want to make sure that the firm you hire to manage your account is reliable and experienced in the currency market. Since you are relying on someone else to recommend or make investment decisions for you, it stands to reason that you want someone who is fully knowledgeable.

Certainly, there is nothing that requires you to have a managed account, and you may not choose to do that. However, for many investors, the idea of sitting down at a computer all day and viewing charts and graphs in order to know the right move to make is just not something they wish to do. It seems a much better move to turn it over to a professional management company who will buy and sell your currency on your behalf, just as a broker would do if you were investing in securities. We know the forex market is not as volatile as the securities market, but that doesn’t mean there isn’t activity. In fact, $1.5 trillion is traded every day in the foreign currency market.

On the downside of the issue is the fact that managed accounts tend to require higher initial investments than ones you could do on your own, especially if you choose a mini forex account. Depending on the management firm you choose to manage your exchanges, you can be expected to invest anywhere from $10,000 – $20,000. Those are high odds to play, if something should happen and the management company makes a wrong trade or fails to trade at the proper time to give you the most ROI (return on investment). The average trader who hires a management company to handle his funds can earn from 5% – 20% every month, or a minimum of $500.

Since most management firms work with several different banks, they have inside information regarding the exchange rate and what the trends are within the currency market. This helps them make choices for their clients that are sound and in their best interests. Since exchange rates tend to change on a daily basis, it’s important to know as soon as possible in order to make a decision on which trades to make on a given day. Even an experienced investor would not have access to that kind of information, thus the idea of a managed forex account can provide an investor with a higher ROI than he could expect to earn if he were doing all the trading himself.

For investors who are considering a managed forex account, make sure the company you choose is experienced and knowledgeable. You also want someone who is going to work on your behalf, knowing what you would want him or her to do concerning each trade. You will not always be there, so your manager must know the decision you will make.