Page 103 - Spring Into Markets
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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
  Cost of Goods
  Gross Profit
  Expenses Salary
Total Expenses
 £0.10 £0.05 £0.15
 £0.10 £0.05 £0.15
  Net Profit
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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