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DFI Presentation Patrick

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Maria Rodriguez
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7 views

DFI Presentation Patrick

Uploaded by

Maria Rodriguez
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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PROFIT & LOSS ANALYSIS

OBJECTIVES

• To define profit and loss analysis


• To know how profit and loss analysis work
• To give types and examples of profit and loss analysis
• Why profit and loss analysis is important

2
WHAT IS A PROFIT
AND LOSS (P&L)
ANALYSIS?
PROFIT & LOSS ANALYSIS

A profit and loss (P&L) statement, also known as an


income statement, is a financial statement that
summarizes the revenues, costs, expenses, and
profits/losses of a company during a specified
period. These records provide information about a
company’s ability to generate revenues, manage
costs, and make profits.

4
PROFIT & LOSS ANALYSIS: HOW DOES
IT WORK?
The P&L statement is one of three financial statements
that every public company issues on a quarterly and
annual basis, along with the balance sheet and the cash
flow statement. It is often the most popular and common
financial statement in a business plan, as it shows how
much profit or loss was generated by a business.
The P&L or income statement, like the cash flow
statement, shows changes in accounts over a set period of
time. The balance sheet, on the other hand, is a snapshot,
showing what the company owns and owes at a single
moment. It is important to compare the income statement
with the cash flow statement since, under the accrual
method of accounting, a company can log revenues and
expenses before cash changes hands.
PROFIT AND LOSS
ANALYSIS
Types and Examples
CASH METHOD

The cash method, which is also called the cash


accounting method, is only used when cash goes in and
out of the business. This is a very simple method that
only accounts for cash received or paid. A business
records transactions as revenue whenever cash is
received and as liabilities whenever cash is used to pay
any bills or liabilities. This method is commonly used by
smaller companies as well as people who want to
manage their personal finances.
ACCRUAL METHOD

The accrual accounting method records revenue as it is


earned. This means that a company using the accrual
method accounts for money that it expects to receive in
the future. For instance, a company that delivers a
product or service to its customer records the revenue on
its P&L statement, even though it hasn’t yet received
payment. Similarly, liabilities are accounted for even
when the company hasn’t yet paid for any expenses.
EXAMPLE OF PROFIT AND LOSS ANALYSIS
EXAMPLE OF PROFIT AND LOSS ANALYSIS
TYPES AND EXAMPLES
WHY IS IT IMPORTANT?

A profit and loss (P&L) statement is one of the three


types of financial statements prepared by
companies. The other two are the balance sheet and
the cash flow statement. The purpose of the P&L
statement is to show a company’s revenues and
expenditures over a specified period of time, usually
over one fiscal year.
THANK YOU
Prepared by:
JOHN PATRICK CHESTER A. REPIA

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