A4 Statement of Comprehensive Income
The statement of comprehensive income (profit and loss account) is a document which includes all of the income and costs related to sales over a period of time. It also includes other comprehensive income (or losses) such as depreciation of assets, income from renting assets, changes in the value of foreign currency held and gains or losses from investments in other companies.
Statements of comprehensive income can be used to;
Compare performance with previous years.
Compare performance with rival firms
Extrapolate to make predictions
Revenue is the total money received from selling goods and services during the trading period. This includes money already received and trade receivables at the end of the period (customers who have received goods but not paid their invoice yet). This is calculated using the formula;
Revenue = selling price x quantity sold
Cost of sales (COS) is the cost of the inventory that was sold during a trading period. This is calculated using the formula;
COS = opening inventory + purchases - closing inventory.
Opening inventories are stock that the organisation has at the start of the trading period, carried over from the previous trading period.
Purchases are inventories bought during a trading period
Closing inventories is the amount of unsold stock left at the end of the trading period.
| £m | |
|---|---|
| Revenue | 8,233.00 |
| Cost of sales | (4,438.90) |
| Gross profit | 3,794.10 |
| Distribution costs | (740.33) |
| Administrative expenses | (487.81) |
| Unrealised foreign exchange gains/(losses) | (12.00) |
| Trading profit | 2,553.96 |
| Share of results of associate | 1.00 |
| Operating profit | 2,554.96 |
| Finance income | 0.90 |
| Finance costs | (63.20) |
| Profit before taxation | 2,492.66 |
| Taxation | (333.20) |
| Profit for the year attributatble to equity holders of the parent company | 2,159.46 |
Gross profit is the money made by a business after subtracting the costs directly related to the manufacture and sale of their goods and services. This is calculated using the formula;
Gross profit = Revenue - cost of sales
Expenses are the indirect costs of operating a business. Otherwise known as overheads, they are costs that are not directly related to the manufacture and sale of goods and services. They include rent, marketing, salaries and wages, research and development, utilities, administration expenses and depreciation.
Trading profit is the profit made from their core operations. This means their revenue minus costs related to the production of their products and services. It is calculated using the formula;
Trading profit = gross profit - expenses
Operating profit is the profit made when returns on investments in other companies are taken into account.