Issue link: https://docs.hic.us/i/403552
A A T T T T A A C C H H M M E E N N T T G G T T H H E E I I N N C C O O M M E E P P R R O O J J E E C C T T I I O O N N S S S S T T A A T T E E M M E E N N T T The income projections (profit and loss) statement is valuable as both a planning tool and a key management tool to help control business operations. It enables the owner/manager to develop a preview of the amount of income generated each month and for the business year, based on reasonable predictions of monthly levels of sales, costs and expenses. As monthly projections are developed and entered into the income projections statement, they can serve as definite goals for controlling the business operation. As actual operating results become known each month, they should be recorded for comparison with the monthly projections. A completed income statement allows the owner/manager to compare actual figures with monthly projections and to take steps to correct any problems. Sales Revenue Total Sales (Revenues) Determine the total number of units of products or services you realistically expect to sell each month in each department at the prices you expect to get. Use this step to create the projections to review your pricing practices. - What returns, allowances and markdowns can be expected? - Exclude any revenue that is not strictly related to the business. Cost of Sales The key to calculating your cost of sales is that you do not overlook any costs that you have incurred. Calculate cost of sales of all products and services used to determine total net sales. Where inventory is involved, do not overlook transportation costs. Also include any direct labor. Gross Profit Subtract the total cost of sales from the total net sales to obtain gross profit. Gross Profit Margin The gross profit is expressed as a percentage of total sales (revenues). It is calculated by dividing: Gross Profits by Total Sales www.hsi.us care@hic.us 91