Income statement, profit and loss statement, operating statement terms

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Break-even point

The level of sales at which the total revenue equals total costs incurred; The point at which the business is meeting expenses with no profit, no loss

Operating profit

The prophet remaining after cost of goods sold and operating expenses are subtracted from the business's sales

Net profit (bottom line)

The prophet remaining after the cost of goods sold, operating expenses overhead, draw and taxes are subtracted from the business's sales

Income Statement (statement of operations, operating statement, p&l or profit and loss statement)

The statement of revenues and expenses used to calculate a business's net income or loss for a given period

Credit terms

The terms of purchase or sales as stated on the invoice

Profit margin

Used to indicate profitability, profit margins are developed by converting the gross profit, operating profit, or net profit to a percentage of sales

Sales forecast

Future projection of sales volume of a product or service

Gross Margin Percentage

Gross profit divided by a net sales

Draw

Monies deducted from the operating profit and used by the owner to cover personal expenses including personal income taxes if the business as a sole proprietor ship partnership or LLC. Any monies remaining in the business after the draw is referred to as net profit

Gross Margin

Net sales minus cost of goods sold. Also called gross profit

Overhead

Operating costs not directly associated with the product or it's marketing, such as rent, employee salaries, administrative expenses, etc.

Assumptions

Preconceived notions or hunches on which the owner might base reasonable finance financial projections or other probable developments

Cost of goods sold

The cost of the inventory that the business has sold to customers. Also called cost of sales.

Gross Markup

The difference between what the customer (end user) pays (retail price) and what the retailer (store, distributor, online store) pay (wholesale price) for goods converted to a percentage of what the retailer (wholesale price) paid; the gross markup is usually expressed as a percentage added to the cost of goods sold resulting in the selling price

Net sales

The dollar amount of sales made during a specific time period, excluding sales tax and any returns or allowances

Operating expenses

Costs including selling, administrative, and general administrative and overhead costs involved in a businesses operations throughout the time period.


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