Home – New Forums Money matters Help with butget statement

  • This topic is empty.
Viewing 3 posts - 1 through 3 (of 3 total)
  • Author
    Posts
  • #964880
    questa_services
    Member
    • Total posts: 1
    Up
    0
    ::

    Hi everyone,

    I am in the middle of making business plan for my company. I am using Anatomy of Business Plan book as my guideline and I am currently stuck on budgeting. I am trying to find explanation why things like, purchase of new equipment, loan repayments, owner drawings, are non-income items. P&L statement does not include.
    How do these expenses relate to net profit after tax?
    I hope this is clear enough because I am not 100% sure how to address this question but it is really frustrating for me.

    Regards

    #1008909
    whateverbusinesssolution
    Member
    • Total posts: 57
    Up
    0
    ::

    Hi,
    The items that you have made reference to will be treated as assets or liabilities and not necessarily as income items. Give us a call if you like as we may be able to assist in the preparation of the business plan/ budgets
    Regards,

    #1008910
    BruceR
    Member
    • Total posts: 195
    Up
    0
    ::
    questa, post: 8239 wrote:
    why things like, purchase of new equipment, loan repayments, owner drawings, are non-income items. P&L statement does not include.
    How do these expenses relate to net profit after tax?

    Regards

    Hi,
    In short the P&L statement measures income in a particular against costs measured over the same period. Equipment will have a useful life beyond the time you buy it – this is recognised over that life through depreciation which is how it is reflected in the P&L. Loans have interest as the P&L expense (as the loan principle wasn’t income, the repayments can’t be expenses).
    Drawings have nothing to do with the business except they are you drawing out the profit – not a business cost.
    You may be confusing P&L and Cash Flow statements which should both be part of your financial plan but measure different things (profitability/performance and solvency respectively).
    However I recommend you get advice – although it may come at a cost, having a professional will allow you to concentrate on your business which increases your chance of success.
    Good luck with your business!
    Cheers
    Bruce

Viewing 3 posts - 1 through 3 (of 3 total)
  • You must be logged in to reply to this topic.