5 Top Tips to compare your profit and loss against previous periods

Comparing your current profit and loss (P&L) statement to previous periods is a crucial step in evaluating your business’s financial health. This analysis helps you identify trends, make informed decisions, and take action to improve your financial performance. Here are five tips to help you compare against previous periods in relation to your P&L statement:

• Use a consistent time frame:
  To compare against previous periods effectively, you need to use a consistent time frame. For example, you may choose to compare your current P&L statement to the same period last year or the previous quarter. This helps you identify trends and make meaningful comparisons.

• Identify significant changes:
  Identifying significant changes in your P&L statement is essential for understanding your business’s financial performance. Look for changes in revenue, expenses, gross profit, and net profit. If you notice significant changes, investigate the reasons behind them and take action to address any issues.
• Calculate percentage changes:
  Calculating percentage changes helps you understand the magnitude of the changes in your P&L statement. To calculate percentage changes, divide the difference between the current period and the previous period by the previous period’s amount and multiply by 100. This helps you compare changes in different categories and identify areas that need improvement.

• Prioritise expenses:
  When managing your expenses, it’s essential to prioritise your spending. Some expenses, such as rent and salaries, are fixed and must be paid on time. Other expenses, such as marketing and office supplies, can be adjusted based on your budget and cash flow. By prioritising your expenses, you can ensure that you’re meeting your obligations while still managing your cash flow effectively.
• Use technology to automate expenses:
  Using technology to automate your expenses can help you save time and reduce errors. For example, you can use accounting software to automate invoicing, payment processing, and expense tracking. You can also use expense management apps to track receipts and expenses in real-time. By automating your expenses, you’ll be able to manage them more efficiently and accurately, reducing the risk of errors and overspending.

Managing your expenses is critical for understanding your cash flow and keeping your business financially healthy. By creating a budget, tracking all your expenses, negotiating with suppliers, prioritising expenses, and using technology to automate expenses, you can manage your expenses effectively and make informed decisions that optimize profitability and cash flow.

Who is ActionCOACH’s Business Coach Mark Dilks?

Mark Dilks is an accomplished business leader, experienced coach, mentor and business builder. He supports business owners, executives and teams across Milton Keynes, Bedford, Northampton, Luton & Dunstable in all aspects of building profitable high growth businesses; from start-up phase all the way through to maturity and divestment. No matter what challenges you are facing, Mark will invariably have encountered a similar situation previously and will be able to support you to quickly and efficiently overcome your business hurdles by sharing examples of how other business have solved similar problems that you are experiencing. He is motivated, driven, tenacious and is able to get the very best out of all the resources available to his clients and to ensure that the maximum results possible are achieved.