This page combines and summarizes the steps from multiple pages to demonstrate how you can add more information to your Profit and Loss statement. See the related pages (links on the right) for more detailed information.
Suppose you want to view the earnings before interest, taxation and depreciation (EBITDA) in the Profit and Loss statement. You firstly need to add new groups to split out the interest, taxation and depreciation expenses from the operating expenses, and map the applicable accounts to those new groups. Next, you add a new calculation to determine the EBITDA value. You then need to move the new group and calculation to the position you want them display in the statement. As a result of adding the new group and calculation, you need to edit the existing Net Profitcalculation.In Financial Statements, the Cash Flow statement is calculated using the Indirect method. This might be a different approach for you, if you are familiar with using the Direct method. The Indirect method takes all the movements in the Profit and Loss statement and Balance Sheet related to the relevant Cash Flow groups. This calculation is straight forward for Cash Received (Sales less movements in Accounts Receivable). However, the calculation is more complex for other accounts, such as Accounts Payable, which relates to multiple items in the Profit and Loss statement, such as freight, legal fees, advertising, and so on.
Get familiar with the layout and contents
Following the indirect method, the Cash Flow statement contains the following items:
Groups | Operating | Displays the business trading activity. The relevant Profit and Loss accounts are displayed along with movements in working capital balance sheet accounts. |
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Investing | Displays the investing activity of the business, such as CAPEX. | |
Financing | Displays the financing activity of the business, such as the extension or repayment of loans. | |
Calculation row | The sum of the above three groups to calculate the net cash movement for the period. | |
Cash balance rows | There are two Balance rows, one for the cash at the start and the other for the cash at the end of the period. You can move these Balance rows around, but you cannot delete them. |
You can add more groups, reorder and rename the existing groups. See example below.
Manage the Cash Flow accounts
For completeness, all General Ledger accounts in the Cash Flow statement must be mapped to a Cash Flow group. The mapping is done for you but you should check it to ensure it is correct. You might need to make some changes. See Map accounts to a group.
You must specify the General Ledger accounts that are cash balances. These accounts are not mapped. The value of these accounts display in the cash balance rows in the statement. See Set the bank account in a Cash Flow statement.
When all the accounts are mapped correctly your Cash Flow statement should balance.
Example: Add a group for Accounts Receivable
Suppose you want more visibility on how your Accounts Receivable are affecting your cashflow over the period. You can add a group for Accounts Receivable in your Cash Flow statement.
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The steps below are a summary of steps from multiple pages. See the related pages (links on the right) for more detailed information. |
In the Statements window, click the Profit and Loss statement in which you want to add the EBITDA row Cash Flow statement (or if preferred, clone the Cash Flow statement and then click that to open it).
In the statement setup window, add three groups, one for Interest, another for Taxation and the other for Depreciation.Drag the new groups up to sit below the Operating Expenses a group for Accounts Receivable and drag it up to where you want it to be positioned, for example, just below the Operating group.
Edit the existing calculation to include reference the new group, then click Save.
Click the Accounts tab, then map the applicable accounts to the new groups, then click Save.
Back in the Statements window, click the Profit and Loss statement again.
In the statement setup window, add a calculation for the EBITDA value. The formula is Gross Profit minus Operating Expenses.
Drag the new calculation up to sit below the Operating Expenses group, above the three new groups.Edit the Net Profit calculation box to reflect the changes you made. The formula is now EBITDA plus any other revenue, minus the Interest, Taxation and Depreciation, minus any other expenses.
Click Save > Close > Close > Yes to rebuild the database.
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Related pages
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Academy video |