Profit and Loss Essay

A salary and loss account is something crinklees use to show them their revenue, be and profits for that certain socio-economic class, indeed showing the total amount of profit that the task has made that year, it is extremely important for the business, in particular for the accounts department who chair refer to the profit and loss account a lot. This is because it clearly lays out what the business has played out, and what the business has brought in, it is easy for the business to identify any problems involving finance, and these problems can be solved.Sales Revenue is all of the money which is coming into the business as a result of them selling their products and services, this figure is from purely sales, nonhing is taken forth from sales revenue. I am going to use Whitbreads profit and loss account to show examples of sales revenue, their sales revenue for the year 2002/3 was 1,794.1m and 2,014.3m for the year 2001/2, this figure tells the business that their turn all over has decreased in the past year, this could be for a variety of different reasons, of them is that the business had slightly more food market share in 2001/2, however since than similar businesses have moved into the market and customers interests has been attracted towards those. Also, the business in itself whitethorn have decreased in quality, customers may not be as happy with the business as they were in the previous year and therefore have chose to visit other companies as a result of this.The cost of sales is how a great deal it has cost the business to make a product/service, for example, a company selling jam, their cost of sales would be how frequently it has cost them to produce the jars of jam, this would be the ingredients and jars. For 2001/2, the cost of sales are at a loss of 1.5480.0m, for 2002/3 they stand at a loss of 1,353.1m, therefore the cost of sales were high for the year 2001/2. Reasons for which they cost of sales decreasing could be that the bu siness is now not wasting as many black materials and only using what they aim. Whitbreads cost of sales could be paying suppliers of places such as Beefeaters for the products which they produce.Raw materials are materials which the business uses in order to produce a product, for example, a Pizza shop get out need to import raw materials such as flour, cheese, tomatoes and pepperoni, these raw materials are they created into a finished product, in this case, the pizza.Opening and closing stock is to do with stock and the financial year, how much stock the company has at the start of their financial year, and how much they have at the end, this way the business can look at how successful a product has been throughout the year.Expenditure in a business is what it is costing them to keep the business running, without these things the business would not be able to keep running, these are known as ongoing costs. There are a large variety of expenditure costs, for example-employee co sts -repairs -interest -administration -distribution costs -etcLooking at Whitbreads accounts, in 2001/2, their expenditure was 389.9m and for 2002/3 was 203.9m. In 2001, Whitbreads spent 25m on restructuring costs, meaning this money was spent on ways ti improve the business, new-fashioned technology may have been purchased so the business does not need to spend money on other expenses.Depreciation is when an asset, for example a car, loses value over time, a car bought in 2001, will be worth less in 2002, this is because new models will have been launched and therefore customers will prefer these. On the profit and loss account, depreciation is barf under expenses. In 2001/2 deprecation for Whitbreads was 3.9m, and for 2002/3 was 7.8m. Therefore depreciation was much high during 2002/3, the reason for this is probably the fact that during the restriction stages, the company has purchased new technology which has now decreased in valueTaxation is known as the corporation tax whic h has to be paid by all contain companies, it is taken from their profits, and is usually a cut of them, this goes is paid to the government, obviously every companys taxation is different. Whitbreads taxation in 2001/2 was 59.4m, for the year 2002/3 it stands at 50.0m., therefore taxsation was around 5.9.4m higher in 2001/2, this is because this year the business had a slightly higher sales turnover, meaning the taxation is higher. hoggish profit is all profit made from the business, including what it has cost the business to keep running i.e. expenses.. This means that gorss profit is sales revenue, minus cost of sales, this figure creates staring(a) profit.Sales Revenue Cost of sales = Gross ProfitGross profit during 2001/2 stands at 466.3m, and for the year 2002/3 are 441.0m. This tells us that unrefined profit was slightly higher in 2001/2, this is because there was a different number of sales in this year that the other. However, the gross profit figure may also be differe nt because the company is not bringing in as many sales as in other years. The business essential be aware that the gross profit is not a true indication of their current performance because it does not take into accountNet profit is the businesses total profit for that financial year, in order to figure out the lettuce profit, the business must first work out the gross profit, because take away business expenses, giving the final profit figure. For the year 2001/2, the net profit was a loss of 52.4m, however in 2002/3 the businesses net profit was 152.8m, meaning the business made a higher net profit in 2002/3. The reason for this is probably the fact that the business under went a lot of reconstruction. The net profit gives Whitbreads a clear indication on how they are performing as a company.Looking at Whitbreads accounts, I would say that as a business, they have clearly made excellent improvements since their reconstruction, they have gone from making a large loss, to making a large profit in just a year. Therefore I would defiantly invest in Whitbreads, however I would prefer to see the accounts of Whitbread over the next few years to make sure customers havent lost interest, in a few years time, Whitbreads may need to make more improvements to its business to make sure they are keeping up to date.