The Profit and Loss (P&L) report is a financial statement that summarises revenue and expenses for a full financial year or a specified period, giving a holistic picture of financial performance and displaying the taxable profit or loss for a business.
The P&L is accrual-based, not cash-based. This means it includes all your income and expenses that occurred within the nominated period, whether payment has been made/received or not. Therefore, if you have been invoiced for services/goods but haven't yet paid, then they are still included on the P&L.
How to use the report
To review your financial performance and gain insight into your potential taxable income.
How to create the report
Go to Reports > Profit & Loss
Select the data source you want to view
If you select Actual + Plan, you will also need to select a revision month
If you select Actuals then only actual data will be shown
If you select Plan, you will need to select the plan you want to use in the analysis
Click Apply to display the report
What is included in the P&L?
Income and expenses that have been invoiced within the period
Interest on loans
Depreciation on capital items
Stock or product on hand
Shareholder salaries
What is not included in the P&L?
Personal items
Capital sales and/or purchases
Any principal repayments on loans
Adjustments
A P&L includes adjustments for depreciation, shareholder salaries, livestock and product on hand. In Farm Focus you will need to enter these as manual adjustments.
Select the Adjustments icon at the top right-hand corner of the screen.
Livestock Adjustments:
The livestock adjustment is calculated if there is a change in stock numbers throughout the financial year. This is automatically calculated using your closing and opening stock numbers for that Financial year and the values entered in your production settings. The automated adjustments can be manually overtyped if required.
Check the box to include these adjustments. You can also overtype any of these if you wish to view different scenarios.
Other Adjustments:
You have the option to enter data for your other adjustments. You can choose to add in depreciation on your assets, shareholder salaries and product on hand.
The Product on hand could include the value of supplement and feed you have on hand, or wool on hand.
Please ensure that the data you enter here is the change in your Opening Product on Hand LESS your Closing Product on Hand.
The adjustments can be found at the bottom of the report, included above the Net Profit/Loss:
Other information you can get from your Profit & Loss report:
You can calculate your Gross Profit Margin from your P&L report. This ratio shows whether you have sufficient profit to cover all your expenses.
Calculation:
Gross Profit Margin = (Gross profit / Total Revenue) x 100
You can compare this Gross Profit Margin % against other businesses in your industry to benchmark and review how you are tracking.