Financial Performance Of Smiths Ltd

1618 Words Oct 6th, 2014 7 Pages
Income Statement An income statement provides a historical record of business transactions over 1 financial year. The PURPOSE of an income statement is to identify the sustainability of the business and also allowed Smiths Ltd to see how much profit and loss they have made and allows them to change their budget accordingly. Its PURPOSE is to also provide vital information which can be used to evaluate financial performance of Smiths Ltd. Its PURPOSE is to also provide analysts and investors with information such as sales revenue and expenses from business operations to see if they should invest money in Smiths Ltd or not. It also provided as summary of vital components so that they can be compared to other similar businesses and organisations.
TPLA-this is when trading has happened, and has the profit/loss details for a particular year.
Sales (also known as revenue or turnover)
Smith’s Ltd the business had sale revenue of £500,000 on credit. This means that Smith’s LTD sold £500,000 worth of goods and items on credit to its customers who are debtors to the business and have yet to settle the money owed to Smith’s Ltd.
Cost of Sales: Cost of sales are costs associated with producing the product. This includes the cost of labour and all the raw materials used to produce the products which Smith’s sell as well as the cost of running any machinery which was used in the manufacturing process.
Smith’s Cost of Sales would be calculated as: Opening inventory at 1/1/20*8…
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