Presentation Transcript

1. How to Read a P&L Statement

   George C. Gendron Jr. Concord Hospital Director of Financial Reporting September 6, 2012
2. Agenda: What do you want to get out of this? What is a P&L? Information contained on a P&L Dissection of a P&L Look at other P&L’s Questions
3. What is a P&L Statement? Profit and Loss Statement Also called: Income Statement Statement of income Statement of income and expenses Statement of activity Statement of operations Statement of earnings
4. What is a P&L Statement? The financial statement that summarizes the revenues, costs and expenses incurred during a specific period of time – month, quarter or year. Its also often compares to a budget, prior year, prior month or prior quarter. The P&L statementprovides information that shows the ability of a company to generate profits by increasing revenue and reducing costs/expenses. It shows the bottom line of an organizations operating activities.
5. What is a P&L Statement? A P&L is included with a Balance Sheet and Statement of Cash Flows as part of an organization’s financial statement package and should be analyzed together. There are accounting rules that specify how an organization’s or an industries financial statements are to be presented, called FASB pronouncements.
6. Based on the industry you are looking at, the P&Land terminology would be slightly different, i.e. non-profit, private company or publicly traded company. They should all tell you same thing. A non-profit income statement, the bottom line is called the change in net assets or excess of revenues over expenses
7. There are ratios that are calculated off of information on the P&L. Profit margin or operating margin, is the net income divided by the sales or net revenue. Operating margin show you how much a company makes (before interest and taxes) on each dollar of sales. An operating margin of 10% shows that an organization is making $0.10 on every dollar of revenue. Total margin is net income divided by total revenue which examines an organization's revenue as a function of its expenses. Typically used in Healthcare to measure total profitability because it includes the non-operating activity.
8. Example of a publicly traded company P&L 1
9. What is a P&L Statement? 1 This is the amount of gross revenues (sales/charges) that Google generated in each of the years shown. The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any discounts allowed. The sales number reported on a company's financial statements is a net sales number, reflecting these deductions.
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11. 2 This is how much it cost Google to generate the gross revenues or Cost of goods sold. The direct costs attributable to the production of the goods sold by a company. This amount includes the cost of the materials used in creating the good, along with the direct labor costs used to produce the good.
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13. 3 The amount of money Google generated from its sales in each year. A company's revenue minus cost of goods sold. Also called "gross margin"
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15. 4 The operating costs of running Google. This would include items such as salaries for sales and administrative staff, overhead expenses(rent/utilities/supplies). Often under tight control of management as this is often the first area targeted for expense reductions.
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17. 5 The amount of profit Google generated after operating expenses excluding depreciation, taxes and interest. The amount of profit realized from a business's operations after taking out operating expenses - such as cost of goods sold (COGS) or wages .
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19. 6 The amount of income Google generated from other activities, outside of its primary business line.
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21. 7 Income before taxes generated by Google Income taxes paid by Google Net income generated by Google
22. 8 9
23. 8 9 8-Adjustments required by Accounting rules and regulations typically one time adjustments 9-Income distributed to shareholders
24. Other examples of P& L Statements: http://investor.google.com/earnings/2011/Q4_google_earnings.html http://www.nh.gov/liquor/2011annualreport.pdf http://ycharts.com/financials/FB/income_statement/annual
25. Questions?