Page 103 - Spring Into Markets 2021
P. 103

Simple profit and loss statement
This is when retail sales, cost of goods, gross profit, expenses and net profit are recorded in one document. Therefore a simple profit and loss statement for my chocolate bars would read...
With VAT
  Total Sales
 £1.00
 £1.00
  VAT
  £0.00
  £0.15
  Cost of Goods
   £0.40
   £0.40
  Gross Profit
  £0.60
  £0.45
  Expenses Salary
Sign
Total Expenses
 £0.10 £0.05 £0.15
 £0.10 £0.05 £0.15
  Net Profit
  £0.45
  £0.30
Sales and profit
A good phrase to try and remember is that sales are for show and profits are for ‘dough’. A trader has to be in business to make a profit otherwise the business will FAIL
Cash flow
It is very important that a trader keeps some of the surplus money (from the prof­ its) as cash flow. Keeping a healthy cash flow will ensure that a trader has suffi­ cient cash to buy more stock and in case of an emergency. If a trader doesn't have a
positive cash flow he/she doesn't have an ongoing business venture.
Try and negotiate with suppliers for 30, 60 or 90 day terms of payment. If a trader has the money (cash) and can get good terms, he/she can collect interest until he/
she needs to pay. It is great if a trader can buy products, sell them at a profit, and then pay for them while he/she orders more products. Also if a trader is prof­ itable he/she should try and not overspend this positive cash flow. Try and save the money to grow the business for when a new product or opportunity comes up.
  Guide 14 Simple Profit and Loss 103




































































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