Profit and Loss
Profit & Loss Account - Key Components
Revenue/Sales
Operating profit
The total amount of income generated from the sale of goods or services before any costs or expenses are deducted.
Earnings before interest and taxes. It is calculated as Gross Profit minus Operating Expenses.
Other income/expenses
Cost of goods sold (COGS)
Income or expenses not related to the core business operations, such as interest earned, gains or losses from investments, or foreign exchange gains/losses.
The direct costs attributable to the production of the goods sold by the practice. This includes raw materials and direct labour costs.
Gross Profit
Net profit before tax
Calculated as Revenue minus COGS. It shows the profit made before deducting operating expenses, interest, and taxes.
The profit remaining after all operating expenses and other income/expenses have been accounted for, but before taxes have been deducted.
Operating expenses
Net profit after tax (net income)
Costs required to run the practice that are not directly tied to the production of goods or services. Examples include rent, utilities, salaries, marketing, and depreciation.
The final profit available after all expenses, including taxes, have been deducted. This represents the company's actual earnings for the period.
Tax expenses
The amount of income tax the company is obligated to pay based on its taxable income.
Future Practice Owner.
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