The Profit and Loss (P&L) report provides a means of monitoring the progress of your 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.
The purpose of the P&L is to provide a more holistic picture of how your business is actually performing. It will show a true profit or loss for your financial year as it will take into account your adjustments.
What is included in the P&L?
income and expenses that have been invoiced within the period
interest on business 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
How to use the P&L in Farm Focus:
You can find your Profit & Loss report in the Reports section of Farm Focus.
Click into Profit & Loss tile on the Reports landing page, and select the financial year and Plan you would like to view.
To add more accuracy to the report you can select the Adjustments icon at the top right-hand corner of the screen.
Livestock Adjustments:
These adjustments are calculated from the information you include in your Settings > Production for your opening and closing livestock values. This will give you a true view of your business progression with the value of stock on hand.
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 in 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.