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Standard profit and loss statement this is a partial

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Unformatted text preview: s As the chart suggests and the previous examples show, there is a logical link between the business numbers in a standard analysis. • Your sales forecast should show sales and cost of sales. The same numbers in the sales forecast are the ones you use in the profit and loss. • As with sales, you should normally have a separate personnel table, but the numbers showing in that table should be the same numbers that show up for personnel costs in your profit and loss table. • Your profit and loss table should show the same numbers as sales and personnel plan tables in the proper areas. It should also show interest expenses as a logical reflection of interest rates and balances of debt. HURDLE: THE BOOK 14.12 ON BUSINESS PLANNING • Your cash flow has to reflect your profit and loss, plus changes in balance sheet items and noncash expenses such as depreciation, which are on the profit and loss. The changes in the balance sheet are critical. For example, when you borrow money, it doesn’t affect the profit or loss (except for interest expenses later on), but it makes a huge difference to your checking account balance. • The balance sheet has to reflect the profit and loss and the cash flow. • Your business ratios should calculate automatically, based on the numbers in sales, profit and loss, personnel, cash flow, and balance sheet. LOGIC OF BUSINESS STATEMENTS The business plan tables and charts should be linked together to reflect the practical realities of business numbers. Summary Use the charts together with the tables to illustrate and enhance your analysis. For example, keeping the Cash Flow chart visible while changing assumptions gives you an instant picture of whether or not you have exceeded available cash resources as you plan your operations. CHAPTER 15: THE BOTTOM LINE The familiar phrase “the bottom line,” often used synonymously with the conclusion or the underlying truth, is actually taken from the standard Income Statement in accounting, which subtracts costs and expenses from sales and shows pr...
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