p5 unit 2 business Essay

1173 Words Oct 21st, 2014 5 Pages
In this I will be explaining the profit and loss of the Domestic Dog Homes along with the explanation of the balance sheet of Domestic Dog Homes.
The profit and loss account is a type of business information which companies or Domestic Dog Homes (DDH) can use to see the financial performance of their company over a certain time period.
The profit and loss account shows the sales, cost of sales, gross profit and net profit from the DDH trading accounts it shows that DDH made of gross profit of £33,000 without taking into other accounts such as costs of sales, stock etc… the profit and loss account also shows that DDH made a net profit of £11,600.
DDH make their sales by selling their stock/ their products, DDH specialise in selling
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I think this is not a healthy profit to have as they will still have to use that money to buy stock and pay for any outstanding bills and other immediate costs such as building maintenance, which will leave them with even less money. The costs DDH would have to think about and pay would be more fixed cost such as building maintenance i.e. lighting, water, gas etc… they would also have to think about the fixed cost of, tills, computers, vans/ vehicles and the building itself along with many more costs.
Net profit is the amount by which income from sales is larger than all expenditure. The net profit is calculated by taking away the total expenses from the gross profit. This is why net profit is always lower then gross profit as the expenses added up are taken away from the gross profit leaving them with less. For DDH the total expenses were £21,400 which taken away from the gross profit of £33,000 left them with the net profit of £11,600. This I would say, is again not a healthy profit as it is not that much money in terms of how much money they put in, although this is excluding expenses it is still not that much money as DDH may want to introduce a new product or invest into something new. However overall they are ,making a profit as all the costs and expenses were taken in and they still have £11,000 profit.
A balance sheet shows the value of a business on a particular date. A balance sheet shows what the business owns and owes, its assets

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