Add Initials Profit and Loss Statement with airSlate SignNow

Esign profit and loss statement

so I just finished up a meeting with a potential client this guy is a realtor and he rolls up to the meeting in $100,000 Mercedes we sit down and about five minutes into the meeting this gentleman starts crying saying PK I need financing but I've been declined by five different banks what do I do because I said Scott let me see your profit and loss statement I take one look at his profit and loss statement and I start crying so what we're gonna do today is I'm going to show you exactly how to put together a profit and loss statement what a profit and loss statement is why it's important and most importantly at the end of this video I'm going to give you a template that you can use for your very own business so what exactly is a profit and loss statement or pnls are referred to it's nothing more than your gross sales minus your cost minus your fixed expenses over a specified period of time this could be monthly quarterly or annually why are P&L so important three big reasons number one it helps you keep a pulse and the overall health of your business number two it makes tax time much easier you might even save on accounting fees and number three which is probably the most important is anytime you try to acquire business loan or any kind of business capital the lender is likely going to ask for a P&L this is something that we could assist with too of course let's get into the actual PML here's how it works the top line is your gross sales let's say you're in the e-commerce business and you sell iPhone cases for example and each iPhone case is $20 and you sold a thousand of them last month well this makes your gross sales twenty thousand dollars so you can put that on the top line the next line down on our PML is called a cost of goods sold or cogs this is basically any cost that's directly correlated to the sale production or procurement of your product in other words if you didn't have any sales you wouldn't have any cost of goods sold either so think about those expenses in the example that I gave of our iPhone case company let's pretend that it costs a dollar 50 to manufacture one of these and then let's pretend you sell them on Amazon or Ebay and it costs 50 cents per piece every time you make a sale and then let's pretend it cost you 50 cents to ship one out that's a total cost of two dollars and fifty cents per unit remember last month you sold a thousand of them so your cost of goods sold would be twenty-five hundred dollars the next line down is there profit this is also referred to as our margin this is basically your gross sales minus your cost of goods sold in the case of our iPhone case company this number would be seventeen thousand five hundred dollars so you got your twenty thousand dollars a month in gross sales minus twenty five hundred in procurement production and shipping cost so you end up with seventeen thousand five hundred all right guys the next set of lines down are your fixed expenses basically fixed expenses are expenses that are going to be fixed regardless of whether you solve one iphone case or whether you sell a million iPhone cases some examples are rent utility telephone and internet so let's go back to our case study the iPhone case company right we have fifteen hundred dollars a month in rent we have two hundred dollars a month and internet and phone and would say we have three hundred dollars a month in utilities that makes a total fixed expense of two thousand dollars a month the next line down is our interest expense let's pretend our friend that owns the iPhone case company went through our startup funding program and got a line of credit to purchase inventory and let's say the interest payment on this is five hundred dollars a month so you would add that five hundred dollars as an interest expense to this line car right guys we're down to the last line on our PNL this is the profit or loss line also referred to as the bottom line this basically determines whether your company is making money or losing money all it is is your gross sales minus all the expenses that we listed out and in the case of our iPhone case company this number comes out to fifteen thousand dollars in monthly profit it's pretty good it's probably because he went through our start-up funding program at the beginning of this video I promised you a template of a P&L while the download link is down below I've created a nice Excel version for you with all the formulas programmed into it so you barely have to do anything it's the lazy man's PNL go ahead and download it and enjoy it if you like this video subscribe to our YouTube channel and like our Facebook page for Midwest corporate credit I'm PK Patel thank you for watching [Music]