Income statement, profit and loss statement, operating statement terms
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.