Financial
Operating Statement
Analysis
Statistics & Risk
Management
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Sales and Revenues
 Sales are the funds received from the normal
products and services provided by an
organization.
– Cash Registers
– Bank Deposits
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Sales and Revenues
 Additional Revenues result from Interest
received, sales of assets, etc.
– Bank Statements
– Contracts
Accrual Basis: Recognized when Earned
Cash Basis: Recognized when Received
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Gross Profit
 Gross Profit is computed by subtracting the
direct costs of the sales from the sales
Revenue.
Gross Income = Sales – Cost of Goods Sold
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Gross Profit
 Gross Profit is calculated so that management
can understand what the sales of products
generate in the area of profit.
 Inventory plays into this, will cover that later.
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Expense Summary
Compilation of Operating Expenditures
 Fixed Expenses (Depreciation, Rent….)
 Variable Expenses (Wages, Utilities…)
 Excludes Purchases for Resale.
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Depreciation &
Amortized Expense
 Used when the cash price is not expensed
out all at once.
 Buy a business vehicle for $50,000 that will
last 10 years. What is the cost per year
assuming the vehicle will be junk in 10 years?
 Buy a years insurance policy for $12,000.
What is the expense per month?
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Net Profit (or Loss)
 Take the Gross Profit and subtract the
Expenditures and you have the Net Profit (or
Loss)
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Using Ratios
 Revenue Mix Ratios
 Gross Profit Ratios
 Expense Mix Ratios
 Expense to Revenue Mix Ratios
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