Calculation methods used by Phocas for financial statements modes
P&L
- Gross Profit = Revenue – Cost of Sales
- Operating Profit = Gross profit – Operating Expenses
- Net Profit = Operating profit + Other Revenue – Other Expense
Balance Sheet
- Total Assets = Current Assets + Non-current Assets
- Total Liabilities = Current Liabilities + Non-Current Liabilities
- Total Liabilities and Equity = Total Liabilities + Equity
- To balance, Total Assets should equal Total Liabilities and Equity.
Retained Earnings
- Retained Earnings appears on the Balance Sheet under ‘equity’, but is a calculation that involves data from the P&L. It is calculated as A + B, where:
- A = Sum of all transactions for all dates for P&L accounts totalled to the end of the current period (from the beginning of time, not from the start of the current period)
- B = The amount already in retained earnings*
- *This could be an existing account that is already called retained earnings. Or it could be another account that you’ve manually mapped by right-click or by going into Design > Options during database setup. If you don’t have either of these, Phocas will automatically create a retained earnings account, which will just contain A.
- The Retained Earnings account (if you have one) MUST be mapped as ‘Equity’ for its category.
Statement of Cash Flows
- Operating = 'Net Profit' (from the 'Profit & Loss') - Operating Accounts (excluding 'Is Cash' accounts)
- Total net cash from activities = Operating + Investing + financing
- Cash at end of period = Total net cash from activities + cash at start of period
- Cash at start of period = is effectively equal to the cash at the end of the previous period. To determine this, Phocas runs another Statement of Cash Flows in the background using the period as ‘current start date minus 1 day’ and uses the 'cash at end of period' figure from there.