Example Of A Financial Report
My business is a service for the community. I wash cars for a small fee round my local area and I am the only person who is involved and carries out my business. In this statement I will be talking about the financial performance of my business including how a profit and loss account works and what my account tells me.
Financial performance is key to have a successful business so this means that it is key to use profit and loss accounts and also balance sheets. With a profit and loss account the main thing you can use it for is to see if you are making a profit or a loss and then from this you can decide whether the business is worth carrying on or expanding or whether that you should just stop with the business because its making a loss/ not viable. A balance sheet will tell you all your assets and liabilities and will list them and tell you how much they are worth/ costing you, you can also find out your working capital and also find out whether it is viable for you to draw more money out of the business or whether you need to be taking less money out of the business (your drawings).
As I said earlier a profit and loss account can be used to show whether your business is making a profit or a loss and then to decide what you should do next. For my business J.G.WASHES my profit and loss account shows that I made a profit of £85.33 in my first year of running my business and I didn’t take out any money so this fall amount stayed in my business. The only money that has come out of my business is the £12.10 that I paid back to my school which I had borrowed to start my business and paid tax on it (Borrowed-£11 Tax Paid £1.10). The only other money I have used in my business is money to buy stock and equipment but all this money was taken out before this profit was calculated. Another thing that is on the profit and loss account is a list of overheads. Overheads are all of the expenses to set up my business and also run my business. In my business I also got some funding from my family to start my business off but this money doesn’t come up on the profit and loss account. The profit my business makes is calculated my taking away all of the expenses I have (overheads) from all of the sales I make this is called net profit. Gross profit is net profit with other deductions like the stock we have at that time.