The document discusses key factors in a profit and loss account that determine the financial performance of a business. It explains that a profit and loss account shows net profit, gross profit, sales revenue, expenses, and income. It states that for a business to be financially successful, its sales revenue should be higher than expenses so there is a net profit. Expenses need to be kept low in order to maximize net profit, while gross profit being too low can result in net losses. The document provides an example analysis of a company's profit and loss account and recommendations for improving performance by reducing expenses, increasing sales revenue, and cutting costs of goods sold.

1. Profit and Loss
Account
AnalysisA profit and loss account is a very initial form
of data that can determine how well the
business are performing. They are a guide
that help you know what kind of finical position
your business is at or will be heading.
The are good factor that will very much help
your improve the business performance.
The factor are;
Net profit – is profit left over minus all
expenses
Gross profit – is amount of profit made
after sales
Sales revenue – is how much the business
starts off with
Expenses – are the cost of running the
business
Income – is money that comes into the
business
Below we shall see the good factors that a
business would need to achieve to have a
good profit and loss account and bad factor
that will negatively affect your profit and loss.
It is very important for businesses to have
their sales revenue higher than their
expenses, because this later determines
how much net profit will be available
The net profit determines how well
your business has done in a selected
period. If the net profit is minus this
shows poor performance.
The expenses can determine how much
net profit you have left. The expenses need
to be kept as low as possible. The lower
the expenses the higher the net profit.
The gross profit being low can increase
the chances of your net profit being on
minus
What I would
say for this is
that the sales
revenue is at a
ok number
The expenses
where actually
quite high
The gross profit
is at an ok
amount its not
bad but its not
great
The expenses are
quite high
The net profit
is ok its not on
minus but its
not so high in
numbers.
My
Recommendation
What I would recommendation
for creamy cow is to make
their expenses as low ass
possible this could mean
reducing staff salary and
finding a cheaper place to rent
out, using less electricity.
Another recommendation is to
increase their income, so
basically they can get more
customers to buy their product
so that they can gain more
money.
My final recommendation is
for creamy cow to try and find
a cheaper supplier and cut the
cost of sales so that the gross
profit will be high.