INCOME STATEMENT
Is a financial statement that measures a
company’s financial performance over a specific accounting period. Financial
performance is assessed by giving a summary of how the business incurs its
revenues and expenses through both operating and non-operating activities. It
also shows the net profit or loss incurred over a specific accounting period,
typically over a fiscal quarter or year (Colin, 2008). And Lynch (2003) support
Colin (2008) by saying that because the income statement shows how much a
company earned or lost during the year, many analyst’s stockholders and
potential investors consider it the most important report available. An income
statement contests the revenues earned from selling goods and services, or from
other events, against all costs and outlays experienced in the operation of the
company and the difference is the net income (or loss) for the year.
The following is the
income statement of the Cresta Marakanelo for the year ended 31 December 2012.
How can they minimize
their expenses while at least making a profit? Because in the above statement it
shows that the finance income is less than finance expense.
It is critical for the establishment like Cresta group to minimize its expenses because the above income statement for the year ended 31 December 2012 shows that finance expenses are more than finance income which is not good in business perspectives (Egelhoff .T; 2013) state that variable expenses do change and can be all over the place from month to month. Variable expenses regularly go up and down with sales. More sales, more inventory consumptions etc. This is where most of the problems begin. With fixed expenses you know what they are each month. Variable expenses can rapidly put you in the "poor house" in as little as one month. Large overheads that seemed doable when the order was placed may suddenly create a drain on resources. Therefore if your company has an antiquity of expenses over the past three years, list all the variable expenses from those balance sheets. Compute the maximum amount paid and the average amount paid for each period and keep it handy. When the bill for that variable expense comes across your desk compare it to the high and low for the consistent.
ReplyDeleteAccording to Bizmove (2013) Increasing revenues through reduce costs and cost cutting must be based on the notion of an organized, planned program. Unless adequate records are maintained through a proper accounting system, there can be no basis for ascertaining and evaluating costs. Cost cutting is not simply attempting to slash any and all expenses unmethodically. The owner-manager must know the nature of expenses and how expenses inter-relate with sales, inventories, cost of goods sold, gross profits, and net profits.
ReplyDeleteAny decrease of expenses will always go straight to the bottom line. But, where to cut? Start at the top. Things like expensive offices, overstuffed chairs and excessive bonuses send the wrong message to employees that excessive spending is OK. Encourage workers to submit cost cutting ideas frequently and compensate them with respect, even if the idea is unusable (Egelhoff .T; 2013).
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