How to make a Earnings statement

9 January 2009 - 14:41

The Earnings statement, also known as Account of Results, or Been (or Account) of Gains and Losses, is a financial report that show the income and expenses that a company throughout its economic exercise has obtained.

Examples of income are the financial sales, dividends, income, etc.

Examples of expenses are the consumption of merchandizes, financial expenses of personnel, expenses, depreciations, taxes, etc.

The difference between the income and the expenses knows as benefit him (when the income are majors that the expenses) or like loss (when the expenses are majors that the income).

Unlike the Flow of Box, the Earnings statement shows to the income and expenses at the moment at which they take place, regardless of the moment in which the collections or payments are made cash, for example, registers a sale or a purchase at the moment that takes place, although this one is received or it is pleased months later.

The importance of the Earnings statement is that this one allows us to analyze the financial situation of the company, for example, when comparing different scenes where the production has increased or handicapped; or, in the case of a Earnings statement Projected (also known like Operative Budget), when showing to us the projections of the future income and debits that the company will obtain, allow us to know the future yield the business and, therefore, its viability.

We see next a simple example of how to make a Earnings statement Projected:

A manufacturing company account with the following data:

• projections of sales: January: 85000, February: 88000, March: 90000, April: 92000.
• projections of production cost: January: 47000, February: 51000, March: 50000, April: 52000.
• the expenses of administration and sales are 20% of the projections of sales.
• depreciation is of 10% of the production costs.
• projections of the interests by loans obtained: January: 900, February: 750, March: 90, April: 450.
• the tax is 20% of the utility available.

State of Gains and Losses Projected

	January	February	March	April
Net sales	85000	88000	90000	92000
Production cost	47000	51000	50000	52000
GROSS UTILITY	38000	37000	40000	40000
Expenses adm. and of sales	17000	1790	18000	18400
Depreciation (10% C. production)	4700	5100	5000	5200
UTILITY OPERTIVA	16300	14300	17000	16400
Interests	900	750	90	450
UTILITY BEFORE TAXES	15400	13550	16400	15950
Tax to the rent (20%)	3080	2710	3280	3190
NET UTILITY	12320	10840	13120	12760

Labels: Concepts, Accounting, Finances, Tools of business

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1. How to make a Flow of Box
2. The balance point
3. Costs in an industrial company
4. Costs in a marketing company
5. The accounting of costs