Profit and Loss (Service Business, monthly)
| Revenue | 42,000 |
| Consulting fees | 38,000 |
| Retainers | 4,000 |
| Operating expenses | (21,850) |
| Contractor fees | (9,000) |
| Software | (1,200) |
| Rent | (2,400) |
| Marketing | (3,500) |
| Travel | (2,100) |
| Professional services | (1,800) |
| Other | (1,850) |
| Net income | 20,150 |
Profit and Loss (Product Business, monthly)
| Revenue | 65,000 |
| Cost of goods sold | (28,000) |
| Gross profit | 37,000 |
| Operating expenses | (24,700) |
| Salaries | (14,000) |
| Warehouse rent | (3,400) |
| Shipping | (2,200) |
| Marketing | (3,900) |
| Other | (1,200) |
| Net income | 12,300 |
Balance Sheet
| Assets |
| Cash | 48,200 |
| Accounts receivable | 18,600 |
| Inventory | 32,000 |
| Equipment (net) | 14,500 |
| Total assets | 113,300 |
| Liabilities and equity |
| Accounts payable | 9,800 |
| Credit card | 4,200 |
| Loan (long-term) | 25,000 |
| Owner equity | 74,300 |
| Total liabilities and equity | 113,300 |
Cash Flow Statement
| Operating activities |
| Net income | 12,300 |
| Depreciation | 400 |
| Change in AR | (2,100) |
| Change in inventory | (3,500) |
| Change in AP | 1,800 |
| Net cash from operations | 8,900 |
| Investing | (2,000) |
| Financing (loan payment) | (1,200) |
| Net change in cash | 5,700 |
How to read them together
The P&L tells you if you were profitable this period. The balance sheet tells you what you own and owe at a point in time. The cash flow statement reconciles the two: profitable businesses can still run out of cash if AR grows faster than payments come in. Read all three every month.
