The Definitive Guide to Business Finance: What smart managers do with the numbers, Second Edition

Producing a profit

If you have followed the logic in the preceding few chapters, you have all the knowledge required to understand and create a profit and loss account and, indeed, a full set of financial statements. In fact, if you have performed your own calculations of sales and costs as described in the previous few chapters, you also have all the numbers that you need. All you have to do now is present them in the required format. In this case, you can more or less freewheel through the next few pages. This chapter describes the profit and loss account, what it is, how it is structured, what it shows, how to interpret it and how to project your own profits.

The world’s biggest corporate blunders:

• AOL Time Warner racked up a record $99 bn ...