10 Profit and Loss Template Samples
In today’s economy, profit and loss (P&L) statements are more important than ever. Many industries have become more competitive. At the same time, costs for essentials like real estate, transportation, and labor continue to climb. In industries as varied as restaurants and echnology, survival and success come down to the same calculus: taking in more revenue than the cost of doing business. The most efficient and effective way to manage this is a profit and loss template.
Templates take the mystery out of P&L statements. Using them requires no background in accounting, nor do you need to be a math genius. In fact, you need only the most basic mathematical understanding. A profit and loss template shows you at one glance where the revenue is coming from and where outflows are going. You can then determine where to cut costs and set revenue targets with confidence.
Not using a profit and loss template can lead to disaster. A P&L statement provides a lifeline to business owners. It is impossible to judge the financial position of a business without creating an accurate P&L statement and updating it regularly. Business owners may squander money needed for vital investment or cash reserves. The true impact of revenue fluctuations remains hidden. A profit and loss template reveals these important figures.
What Is a Profit and Loss Template?
A profit and loss template provides a ready-made statement. All you need to do is add your current figures into the template. For example, one line asks for your sales figures and another for your labor costs.
A careful reading of a P&L statement reveals where the company can increase its profitability. Is the company spending too much on certain items? Are revenues growing or shrinking? Does the company need to invest in increased sales efforts or cut back to save money? Questions like these are much easier to answer when looking at a profit and loss template. Profit and loss templates provide a detailed accounting of the following:
- Net sales
- Cost of goods sold
- Selling expenses
- Administrative expenses
- Gross profit
- Net profit
Small businesses find P&L statements particularly helpful. Most businesses don’t make a profit until they have been in operation for some time. It takes months and years to build revenue streams. During this time, the business is vulnerable to rising expenses. Business owners can watch expenses closely on their P&L statements. They can also use P&L statements to make informed decisions about where to invest resources and track how these investments impact revenue.
How Does a P&L Statement Differ from a Balance Sheet and Cash Flow Statement?
As we saw in the last section, a P&L statement shows a net profit or a net loss. In contrast, a balance sheet provides a snapshot of a company’s financial situation. It shows the enterprise’s assets, liabilities, and shareholder/owner equity. The name balance sheet comes from the fact that assets must equal liabilities and shareholder/owner equity. As assets and liabilities increase or decrease, equity grows and shrinks. The balance sheet shows the value of the business and helps management make prudent financial decisions.
A cash flow statement shows income and its sources. It also shows expenditures. Cash flow management is a critical issue for all businesses. Lack of liquidity can lead to over-indebtedness or inability to invest in future projects. Managers use P&L statements to evaluate their cash flow management. Investors also use the statement to evaluate the effectiveness of the company’s cash flow strategy.
Why Use a Profit and Loss Template
P&L statements take the guesswork out of financial decisions. Without a P&L, mangers and business owners suffer from a lack of understanding. They lack the knowledge to judge the effectiveness of their investments. In addition, they have no way of looking back on past financial decisions to help chart future moves. By reviewing and comparing expenses and revenue, business people understand why they are running in the black or the red. They can then create plans to improve profitability.
A P&L statement is essential documentation of the financial history of your business. To secure investor money or gain access to credit, businesses must show their P&L statements. The P&L statement is important when selling a business. A strong P&L statement adds value to the sale. Some customers may also request a P&L as part of negotiations.
Every business owner dreads filing taxes. This is due more to the time and aggravation than the expense. Businesspeople would rather focus on bringing in more revenue. P&L statements make the tax filing process more efficient. They provide the needed information for tax filing. Updates to the P&L can also be transferred to tax software.
How to Use P&L Statements for Projections
Projections are one of the tools successful business owners use. A major reason to keep financial records is to use past history to project the future. Success and survival in business requires forward thinking. When a business owner has an idea or must make a decision, he or she needs to weigh the financial impact of the move. Will the move create the desired effect, and can the company afford it?
A P&L statement provides the information needed to create financial projections. The most efficient way to do this is through a profit and loss template. These templates are easy to use. You simply use your business records to determine the numbers that go in each area, and the template handles the math. To create a projection using a template, simply apply your projected numbers instead of current numbers into the template. This allows you to see the effect on your business when the projected numbers become a reality.
How to Create a P&L Template In One Minute
In less time than it takes to make a cup of coffee, you can have a neatly organized P&L statement that empowers you to make the right business decisions. The templates below allow you to complete this important task in one minute. Before you start, you’ll need to collect a few business records:
- Sales receipts (to determine revenue)
- Cost of sales
- Raw materials cost (if applicable)
- Overhead (if applicable)
- Labor (if applicable)
10 Profit and Loss Template Samples
Smartsheet provides user friendly templates that help you drill down on business revenue and spending. The templates provide areas to enter multiple revenue streams by category. They also provide plenty of room for categorizing different costs. It’s important to categorize in a detailed manner; this allows you to see where you are productive and where you may be spending too much.
Smartsheet provides templates for a variety of industries. Industry-specific templates provide pre-filled categories for revenue and expenses. For example, a restaurant-specific template includes pre-filled categories for various food and labor expenses. Here are some examples of the template types:
- Personal (household)
- Advanced P&L options
New customers can try Smartsheet templates for free.
You can also find a variety of template types by accessing the Sample Template Website. Samples, explanations and links to profit and loss templates are included. Also, Sample Templates offers a downloadable explanation of the P&L statement formula. This explanation shows how to create a P&L statement from scratch. Though you will use a profit and loss template, reviewing the formula helps you better understand the numbers and apply them to your decision-making process.
Fillable Profit and Loss Template
For those who understand financial statements, the fillable profit and loss statement can be a good choice. It allows you the freedom to create categories according to your own experience or past methods of accounting. Inexperienced profit and loss template users can use the P&L statement formula to help create their categories.
Trading Account Format Profit and Loss Template
This format works great for investors. They can input their investment and transaction costs to monitor their portfolio performance.
Projection Profit and Loss Template
This template makes projections simple. Rather than having to create a separate profit and loss template for projections, you can input the information into this template, which will provide you with projections based on the data you enter.
Environmental Profit and Loss Template
This template shows the environmental impact of your operations and how they relate to different revenue streams and costs.
Business Profit and Loss Template
This template is great for any business that does not need added features like projection or environmental impact tools.
Simple Profit and Loss Template
Why make it complicated? If you have just a few data points, the simplified version makes sense.
New customers can try these templates for free.
Each decision made by a business owner has consequences long into the future. Using profit and loss templates to create projections allows business owners to make informed decisions. Without the aid of P&L statements, it is impossible to have an accurate view of the current situation and predict future outcomes. A profit and loss statement takes just a few minutes to create and becomes one of a business owner’s most valuable tools.
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