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Goal Profits Review
After two trials and more Betting Oscar wins than any other system or service, Goal Profits has quite a history here at Lay Back!
What started as a simple tipping service way back in 2020 has evolved into something with much bigger ambitions.
Goal Profits is now a community of football traders, focusing on education rather than tips. The aim is to help members learn how to make consistent profit by trading football rather than rely on a tipster (who could disappear at any moment!).
That makes Goal Profits incredibly appealing for many, but a bit daunting for others.
After all, there are many readers here who just want some tips to back and (hopefully) make a bit of profit. If that’s all you want, then Goal Profits is certainly not for you.
On the other hand, if you want to actually learn how to trade then the sheer number of votes that Goal Profits attracts during Betting Oscars season suggests you won’t find a better place to do it.
There’s a £1 trial available when you click here which you really should take advantage of right now.
After a quick recap of the various Goal Profits reviews, trials and Oscar wins I’m going to show you exactly what Goal Profits looks like when you log in as a member.
2020: The First Trial
Hans-Henrik conducted the first Goal Profits trial in 2020 and decided that a Neutral rating was appropriate.
Although stating that, “Let me tell you that I’ve tried a lot of products in my relatively short trading life. And Goal Profits is in the top 5% as regards to quality, support etc. I’m very impressed and I love the product and the support. As I see it, Goal Profits is not a strict method, but more of an education. And I have a feeling that I’m getting better from trade to trade and from week to week.”
He then went on to say, “This is not a system/method for my taste. And the important thing for a bettor is to find a method that appeals to him/her. Goal Profits will certainly be the right thing for some readers. But for me there is just too much “work” with statistics during the game. But that is just my personal take on it.”
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First trialled in 2020 when it was still a fairly new service
This triggered a backlash from Goal Profits members who flooded the trial posts with positive comments.
For example, Mark said, “I’ve been a subscriber to Goal Profits for around 6 months now and have found it to be an extremely profitable service for me. I agree that this system may not be to everyone’s taste as granted there is a lot of information to take on board when you first sign up and some people simply do not like to put effort in.
“Personally I had no idea about the best way to trade the correct score market, but with Steve’s ebook, training videos and daily write-ups I am extremely comfortable in doing so now and regularly achieve similar profits to Steve and on occasions better ones. I’d say my learning curve for this was around 6 weeks, it would have been interesting to see how your results were in the future.
“Yes you may think I have Goal Profits tinted glasses but that is because I have made more money using this service over the past 6 months than I have from any gambling/trading service in the past 6 years!”
A week later, Hans-Henrik posted a further report which showed that his results were slowly improving.
Lucy concluded the trial with the following, “I often feel that people ask the wrong questions about systems. The most common one is, “did it work?” when perhaps we should be asking, “did it work for you?” And it does indeed look from the gradual improvement in results above that you are starting to find a way of making Goal Profits fit your own personal style, and thereby deliver steady profits. Thank you for an excellent trial.”
As expected, Goal Profits turned out to be ideal for some, not for others. After all, that’s exactly how football trading (as opposed to betting) is too!
2020: The Second Trial
By 2020, Goal Profits had evolved. A lot.
The original creator, Steve Brown, had been joined by Kevin Laverick. There was now a membership area, chat room, live support during in-play trades, lots more trading strategies and “Team Statistics” software which had been purpose-built for football traders.
In addition to all that, Goal Profits won two Betting Oscars: “Best Football Betting System” and the big one, “Best Product”.
2020 Best Product Oscar
That was more than enough reasons for Lucy to commission a new trial!
Ian described himself as “the ultimate non-football fan” which ensured that the educational side of Goal Profits would be tested to the full!
At the end of his trial, Ian said, “It’s easy to see why LB&GR readers voted it Best Football System of 2020. The stats on the site are seriously impressive, the chatroom is friendly and supportive and Steve ‘Mr GP’ Brown has been working tirelessly to improve the site and add new features. One is yet another new system which has been trialled positively for 11 months! And more improvements and updates are planned for 2020.
“A few things to bear in mind – the amazing stats allow you to devise your own systems and many members do just that. If you’re a footie statistician you’ll absolutely love it! If you don’t want to devise your own systems, there are many systems ready-to-go, not just the correct score system.
“In all, I’ve rarely been as impressed with a betting or trading site (LB&GR being an exception!).”
Again, there were positive comments from readers to back Ian’s judgement.
Danny said, “I’ve been a member since December 2020, I’ve tried everything trust me and nothing comes close to Goal Profits in terms of an education in football trading. My advice would be to start off small, get your head around one method, then start adding as you go along until you have built up a strong portfolio. There are so many niches to choose from you will never use them all, not even Steve or Kevin use them all, you just need to choose which methods suit your style.”
2020: A Third Trial?
Since those first Betting Oscars wins in 2020, Goal Profits has scooped “Best Football Betting System” and “Best Product” again in 2020, 2020, 2020 and 2020.
According to Lucy, in 2020 “Goal Profits won more than three times as many votes as anything else” which is quite an incredible achievement. She went on to say that, “Goal Profits, without a shadow of a doubt in my mind, has shown every other service out there how it should be done.”
High praise indeed, from someone who has seen the best (and the worst) in this industry.
2020 Best Product Oscar
On their way to winning the “Best Product” Betting Oscar in 2020 (for the 4th year in a row) Goal Profits scooped more than 40% of the total votes.
In 2020 (for the 5th win in a row) 64% of the votes went to Goal Profits! That’s a staggering amount!
So should there be a third trial?
Well. going back to the previous two reviews, I think it’s clear that there’s a learning curve involved.
Results for both Hans-Henrik and Ian improved over time so it would almost make sense to have a reviewer spend six months learning and gaining experience, then starting the actual review.
But we’d be talking about another year to trial a service which has been voted the best by LB&GR readers consistently since 2020.
Is there any point?
With Goal Profits, it’s not a case of simply receiving a few tips and placing bets. There’s no clear “win” or “lose” as with straight betting, so it’s difficult to track meaningful results.
Instead, I asked Steve for access to Goal Profits so that I could see it all for myself. I’m delighted that he obliged, so here’s my overview of what is available right now.
Goal Profits Members Area
When you first join Goal Profits, you receive an email from Paul whose job is to support members and sort out any account, billing or technical issues. It’s a nice touch to have a dedicated support person, it’s usually just an email address that doesn’t get checked very often!
Customer service at Goal Profits has been repeatedly praised over the years and I can see why!
The help and support section in the Members Area only just stops short of begging members to get in contact if they need help. It gives the impression that everyone has plenty of support and states that: “Steve, Kevin and Paul respond to every single email they receive and no-one is ever left to fend for themselves. Very simply, if you need to ask – ask!”
At the top of the Goal Profits Members Area is a button which reads, “New to Goal Profits? Click here to get started”. It takes you through to “Launchpad” which is a football trading course that all members have access to.
Launchpad is introduced as follows:
“This is ‘Launchpad’, your introduction to the fantastic world of football trading! Over the coming months we are going to introduce you to the Live Stats Module, Custom Shortlist Pro, Team Stats and all the trading strategies you have access to.”
“If you’re new to trading there’s a huge amount to learn, so go at your own pace and ask questions at any time. Remember, everybody started on day one with zero knowledge so we have all been in your position. If you feel overwhelmed or confused by anything at any point, email us and we’ll help you.”
“Each Launchpad page contains a lot of information and is split up into sections, just like chapters in a book. There’s quite a bit of reading to do, but you don’t need to pile through the whole lot in one go. Each time you come back to a particular page, ‘Quick Navigation’ takes you directly to the section you want and the arrow (bottom right) takes you back to the top of the page again.”
“Even if you have been trading for a while, it’s best not to skip any sections. You may miss important information which catches you out later on.”
“You’ll notice that there is a particular emphasis on trading psychology. Members continually tell us that they struggle with mindset more than anything else and it’s impossible to trade profitably unless you’re fully in control, so we’re definitely going to help you with that.”
“We understand exactly what you need to trade successfully, so start Launchpad with a clear head and learn from our experience.”
There are then multiple sections:
- Trading Basics
- Trading for Beginners
- Intermediate Trading
- Advanced Trading
Note that if you’re on the £1 trial you get access to Trading Basics and Trading for Beginners only, but Team Stats, the Live Stats Module and the chat room is accessible.
To be honest, it’s going to take you a while to read through these early sections and trade some football matches, so you don’t need anything more during that first week. You can upgrade to a full membership at any time though and then you get access to all of Launchpad and all strategies too.
There are currently 4 trading strategies in the beginners section. Steve has written the instructions for 2 of them and Kevin has written the other 2. They very clearly explain what to look for and how to do the actual trading itself. It seems that the Live Stats Module does most of the work anyway.
It appears that most of Launchpad is written by Steve and goes into great detail. There’s a lot of guidance about how to use their Team Stats and strategies, also the mindset needed to trade well. It really is quite eye opening.
I have also been given access to the later sections of Launchpad and they’re just as detailed. There are curently 6 intermediate trading strategies and all the instructions to go with them, plus more complicated Team Stats, building your own systems and that sort of thing.
It’s obviously been a huge amount of writing and quite impressive, especially for the price.
Football Trading Strategies
There are currently 14 trading strategies in the Members Area.
They are grouped into “Trading for Beginners”, “Intermediate Trading” and “Advanced Trading” to match the sections of Launchpad.
None of them seem to be truly straight betting – as in you could set something up in the morning and then check results later – but a number of them involve getting into a trade once certain conditions are met and then there’s either a goal or not.
In that respect, it’s perhaps a betting/trading hybrid.
Team Stats produces shortlists of suitable fixtures for a number of the strategies, so it’s pretty simple to find trades. You can also filter them by type of league and kick-off time which is helpful.
One comment on the original trial suggested that it’s necessary to sit in front of your PC watching every last little detail for 90 minutes or even watch the football matches.
I asked Steve about this and he said that he very rarely watches matches he’s trading because he has already done his research up to a week in advance using the Team Statistics software. Once the match kicks off he’s only interested in things like shot and corner counts.
Steve went on to say that, “when I’m interested in trading a game in the first half, I already know pretty much when I’m planning to enter the trade. I don’t need to sit in front of my PC watching the numbers tick up though, I can go watch TV, do housework, wash the car, whatever I want. These days, I could even be out shopping!
“It takes less than a minute to check in-play stats with our Live Stats Module at the right time and then I can either enter the trade or not. If I’m using a strategy which doesn’t require any further action, then I’m done. A couple of minutes at the most for the trade.”
But wait… what about correct score trades? They require sitting in front of your PC for the entire 90 minutes, don’t they?
Steve said, “No, not at all. The ‘CS4’ strategy I use requires no more than a minute of my attention during the first half. The second half is where the trading really starts, but even then there’s very little time required and no need at all to sit in front of my screen.”
He continued, “Many members use the quiet moments for research, perhaps for trades the next day. Others search out in-play trading opportunities and some just enjoy watching the games, but no-one has to sit there waiting for something to happen. They could just as easily be watching TV.”
Well this was news to me as I thought that it would be necessary to spend the entire 90 minutes trading matches. Steve also pointed out that most of the strategies focus only on the first or second half only, so that’s a maximum of 45 minutes anyway.
Of course… that makes perfect sense!
So there are 14 trading strategies in the main section. They are all introduced in Launchpad and some of them have video examples of live trades.
In addition, there’s an “Archive” which contains 30 older strategies of various types. They’re generally older or retired strategies which many of the more experienced members still like to use.
Steve suggested that I check out something called “H00T” on a Friday evening and it made me a small profit, so it seems that there’s more to Goal Profits than what first meets the eye!
Football Trading Tools
There are a number of trading tools available, even to non-members.
There’s even a list of official Twitter accounts in the top leagues so that you can check team news and that sort of thing.
Perhaps the most useful free tool though is the Free Football Stats page which gives you a glimpse into the sort of thing that Team Statistics provides (more on that in a sec).
There’s a list of stats for today’s fixtures as well as a shortlist builder. It’s not nearly as comprehensive as the tools available to members (even those on the £1 trial) but it’s interesting.
And this is just the free stuff. members get a lot more.
This was completely overhauled during the summer of 2020 and, in my view, a vast improvement.
Whereas before there were lots and lots of pages full of stats, numbers and graphs, it’s now mostly done from just two, Team Stats and Custom Shortlist Pro.
Team Stats loads up the entire fixture list for the day, then you can hide various types of league. If you’re not interested in South America, uncheck the box and it’s gone. You can also choose a time window for kick-off times so if you can only trade during the evening, hide everything else.
The stats themselves are split into different sections:
- Main Trading Stats
- Goal Times
- Goal Patterns
- League Table Analysis
- Rolling League Table Analysis
- Goal Value Tables
Quite simply, there is tons of information for each fixture and it’s all visible on one page which makes things a lot easier.
You also get form pages (5, 10, 15 fixtures) and a tool which allows you to compare any two teams in the world as if they’re about to play a league game.
The Custom Shortlist Pro page is clever, because it will appeal to complete beginners as well as proper number nerds.
Beginners can load pre-determined shortlists and add more filters to them, if they wish. For example, you can load a shortlist for first half lay the draw and then narrow it down further by taking out teams which have been 0-0 more than a certain percentage of the time.
Custom Shortlist Pro becomes “Number Nerd Paradise” once you start from scratch and build your own shortlists using lots of different criteria. When I say “lots” of criteria, I mean dozens and dozens of them. They can be saved too, so checking them daily is a breeze.
In the example below, I asked for a list of fixtures in which both teams had gone over 2.5 goals in more than 50% of matches and also BTTS (both teams to score). It’s just a simple one I know, but gives you an idea of what it looks like. I could have added win/draw/lose, goals scored in the first or second half, the team which scores first or last, goal times, league positions and on and on.
Elsewhere, Team Stats Trends has ten years worth of data for each league looking at goals, home/away wins, 0-0 scores, etc. For example, if you want to see which leagues have the most over 3.5 goals games, this is the place to find out.
There’s also a “Prediction Site Analysis” which looks at the likes of WinDrawWin and SoccerVista to determine how accurate they are with their score predictions. It’s interesting to note that the Goal Profits score predictions are doing better than all of the others over 20,000 or so logged results.
Goal Profits score predictions are outperforming other popular sites
As if that wasn’t enough, there are 26 – yes, twenty-six! – different league tables for every league included in Goal Profits (currently 68).
I didn’t know there were that many… but I’ve now been able to look at home, away, first half, second half, form, attack, defence, over, under and all sorts more.
I’m not sure who on earth would have the time to go through that much data so I asked Steve whether the league tables are popular with members.
He said, “The league tables are very useful for different types of trades, but there’s an awful lot of information there! What we have done is used Team Stats to do much of the analysis for us and present it all on the ‘League Table Analysis’ page”.
“We then went a step further and developed a series of shortlists so that Team Stats is doing even more work and allowing us to concentrate more on trading”.
Um ok… but what does it actually do?
Steve explained, “There are certain teams which play above or below their actual league position in certain areas of games. For example, the LTA page will tell us which teams play above themselves in the second half and that gives us a unique advantage. Many of the opportunities identified would simply remain hidden if we didn’t have this tool”.
He went on to say, “During the 2020/17 season, LTA identified very early on that Burnley were playing above themselves at home and we were able to match them up with weaker away teams to make a significant profit”.
I have to admit, the “League Table Analysis” page at first glance looks like a random bunch of coloured numbers but it does start to make sense pretty quickly.
Having spent some time in the chat room (quietly stalking!) it is certainly popular with members who constantly sing its praises.
Live Stats Module
The Live Stats Module (also known as “LSM”) was added to Goal Profits during the summer of 2020, just in time for the World Cup.
It tracks shots, corners, dangerous attacks and possession as matches are played, even the times of shots and corners so you can see exactly when teams are attacking or not. With everything tracked automatically and on one page, you can keep up with dozens of matches at once!
The LSM also shows you what has happened during the previous 10 minutes only, so that you can see where the action is currently. Here’s one Champions League match.
The little blue “i” button brings up lots of additional information.
The “Alerts” section shows you which games qualify for various Goal Profits trading strategies as well as added time, red cards and that sort of thing.
The rating (Rtg) attempts to predict the likelihood of a goal, based on a number of factors.
I asked Steve more about this and he said, “It’s important to remember that goals are random events with many variables, including player ability, referee decisions, weather conditions and so on. Unless you have a crystal ball and you can see the future, you simply cannot predict accurately and consistently when goals will be scored.”
He continued, “The LSM Rating highlights which teams are actively attempting to score and from that, we can determine where goals are more or less likely to occur. Predicting the future is impossible, but the LSM raises the odds in our favour – especially when used in conjunction with the rest of Team Stats.”
“We have been developing the LSM since 2020 and we will continue to makeimprovements as we go, in order to give Goal Profits members an even bigger advantage over every other trader.”
You can even filter matches based on a multitude of criteria you set yourself. Certain scores, minimum numbers of shots, match time, pre-match Betfair prices, current Betfair prices and many more options are offered.
The Live Stats Module is certainly very interesting. I have sat here and watched the rating numbers predict goals often, but not always. I can see why it’s valuable for serious traders though as it does a lot of the work automatically.
Live Football Trading Chat Room
I have spent some time observing the goings on in the chat room. It’s pretty busy when Steve and Kevin are trading (and they tell you when that will be) but a lot quieter at other times.
They both walk members through live trades, plus they post some additional trades too.
Just this evening (I’m writing this pretty late!) they were both in the chat room. Steve’s correct score trade finished level (he calls it “scratch”) but he did post a winner in France for over 2.5 goals. Kevin’s correct score trade finished exactly on target which was really impressive!
Every member made a profit from what I could see and there were lots of happy messages. There’s a definite air of professionalism when members are at work, unlike other chat rooms I’ve visited in the past. Steve and Kevin aren’t throwing lots of trades about either. I get the impression that everything is well thought through and that they take a genuine pride in their work.
Also, there’s a forum available which has lots of questions, answers, ideas and “trading diaries”.
Is Everything Included?
When you start your £1 trial, you will have access to the beginner sections of Launchpad, the beginner strategies, the Live Stats Module, chat room and almost all of Team Stats.
Honestly, it’s more than enough to fill a week as there is so much to get to grips with. If you want access to more though, you can upgrade to a full membership at any point.
There are a number of free extras handed out to members at various points, including e-books and a trial of the Pre-Match Scalping Module. This identifies upcoming fixtures in which there is price movement and an opportunity to make a profit before the match even begins. I have to admit that I found it quite confusing and Steve said that it does take time to understand, but that the rewards are sizeable for those who “get it”.
If you decide to upgrade to an annual subscription, the cost reduces to the equivalent of £1 a day and you get more free extras as standard, including Team Stats Excel. This is a spreadsheet sent daily which logs all the statistics before play and then the in-play stats and results of the games. It is for those who want to research their own systems and/or automate their own selection filters.
You can just stay on the monthly subscription if you like though. I checked with Steve and he said that all monthly members get full access to Launchpad, all of the trading strategies, all of Team Stats, the chat room. Everything needed is included.
Goal Profits Review Conclusion
If you have read this far, thanks for staying with me. It was a long one!
There is so much in the Goal Profits Members Area and Steve says he’s working on yet more improvements, updates and additions.
Back in 2020 he said to Lucy, “I have big plans to add loads more over the coming months…” which she said, “is typical of the man and his endless energy”.
Lucy continued, “Truth is, Goal Profits is always developing – and is already a comprehensive product that is turning hobbyist punters into professional traders”.
It seems that the energy reserves haven’t run dry just yet and that Goal Profits will continue its journey, taking plenty of happy members along for the ride.
If you haven’t guessed yet, I have been seriously impressed (and a little daunted) though I’m sure that working through Launchpad properly would help no end.
Also, I received fast replies from Steve to all my (probably annoying!) questions.
Again, if you just want some tips and minimum effort then Goal Profits is definitely, not for you.
But if you want to get stuck in and learn a lot about trading then I haven’t seen anything better.
And with the £1 trial you can try it out with no risk at all. Do it!
Profit Ball Review
Goal Profits is here to help! We hunt down the best betting systems, record their results and show you exactly how they operate. You can then decide which betting tipster or service you’re comfortable trusting your hard earned money with.
There’s a ton of information throughout this site so please feel free to browse everything of interest. We welcome comments and questions too, especially if you have first hand experience of the betting systems we have reviewed.
However, if you’re short of time, click on the link below to read about the best betting tipsters that we’ve discovered so far.
There are many betting system review sites to choose from, but many of them simply record the results as claimed by the tipsters themselves. That’s no help to anyone! You may as well flip a coin and call ‘heads’ or ‘tails’ while it’s up in the air!
I check what odds are actually available when tips are received. It takes a lot of time, but I do it for every tip, every day so that you know which betting tipsters and services are being completely honest about their results.
I never accept payment in return for a positive review. If a system or service doesn’t do enough to achieve a pass rating, then I will tell you exactly why.
Goal Profits Reviewer
Current Betting System Reviews
Here are a few of the betting systems and services that we are currently reviewing.
In most cases, we track results for a total of three months and post updates monthly. Sometimes we decide to extend reviews for another month or two, especially if a tipster is looking for winners at higher odds. Golf tipsters spring to mind!
Once a betting site review has been completed, we summarise our experience and award a Pass, Neutral or Fail rating.
Profitable Betting Systems that Earned a ‘Pass’
In order to earn a ‘Pass’ rating, a betting system must prove to be profitable over the review period.
We also need to see reliability, professionalism and a reasonable cost. Most punters who are looking for a winning betting system are not able to stake large amounts, so cost is an important factor.
If we’re not able to tick all the boxes, we will award a Neutral or Fail rating instead.
Below, you will find a selection of the best betting systems and tipsters that we have reviewed to date. We have published the full results achieved during each review, along with our summary.
You can be confident that these products are worth considering for your own betting portfolio.
Ball Profit Up, Stock Down
By Bloomberg News
Oct. 25, 2002
The Ball Corporation, which agreed in August to buy a German can maker for $1.18 billion, said today that its third-quarter profit rose 38 percent because of more sales of aluminum cans and plastic bottles for beverages. Net income increased to $50 million, or 87 cents a share, from $36.3 million, or 61 cents, a year earlier.
But the consensus estimate of analysts surveyed by Thomson First Call was a penny higher, at 88 cents a share, and Ball’s stock fell $3.47, to $49.52 in trading today.
Revenue rose 3.8 percent, to $1.04 billion. The company’s bottle shipments have risen 33 percent in the first nine months from the 2001 period. Beverage-can shipments increased 1 percent and food-can shipments were up 1.2 percent. Ball said it expected second-half results to be similar to those in the first half, when it earned $1.34 a share.
Profit and Loss
Together with the balance sheet and cash flow statement, the profit and loss statement forms a business’s key financial documents.
Cash is the lifeblood of a business and these statements, with the help of financial ratios enable the business analyse its financial condition and ensure that it has enough funds to survive and thrive and make informed financial, investment and management decisions.
Profit and Loss Statement
In the following sections, we’ll start from the basics to understand the definition of a P&L statement and then consider an example to understand how a P&L statement is created and analysed.
What is a profit and loss statement?
Also known as the income statement, the Profit and loss statement is the first financial report based on which all other statements are prepared. It is a report card for the business. It reflects a business’s profitability or financial performance, offering a snapshot of its income and expenditure and its profits during a specific time period.
Profitability matters to a business’s existing and future lenders and investors, its stakeholders, competitors, regulatory bodies and everyone associated with it.If the company is not profitable, it will show a net loss and will not be able to qualify for credit from lenders.
If the company is profitable and shows a net income, it shows its ability to make use of the funds borrowed and invested efficiently.
Income statements are usually prepared monthly, quarterly and annually and answer the following questions:
- Are sales high or low?
- What is the gross profit? How much money is available to the business after costs?
- What are the expenses for the time period covered by the statement?
- What are the increases and decreases in net income?
- How much money is available for expansion?
- How much money is left for the owners?
- How much money is available to repay loans?
The profit and loss statement is based on the simple formula:
Income (-) Expenses = Net profit
The net income is derived from deducting the total expenses from the total income, showing how profitable the business is and is an indicator of the efficiency of its operations.
When the income is more than the expenses, the business is said to have made a profit. When expenses are more than the income, the business would have made a loss.
The information contained in the profit and loss statement makes it a valuable tool that helps identify expenses and analyse the rationale behind them, allowing tighter control so that steps may be taken to being more profitable.
The Profit and loss statement reveals how much cash has been spent and earned by the business for a given time period, along with the related costs and expenses. It reflects the profit or loss for that period.
While the P&L shows revenues, expenses, gains and losses, it does not list money received and money paid out.
Unlike the balance sheet, which shows the business’s financial position at a specific point in time, the P&L statement relates to a specific time-frame: three months, six months or 12 months.
Profit and loss account format
The profit and loss statement format is based on the complexity of the business’s operations. Businesses usually choose between two formats for the P&L statement. These are:
- Single-step, where there is one category for income and one for expenses. This has its limitations as it cannot compute financial ratios.
- Multi-step, where the expense account is further sub-categorized into various heads, allowing the business to calculate its gross profit, net income and operating income.
Whichever format is used, income is always at the top of the statement before expenses.
The job of a P&L statement is to add up sources of revenue and deduct expenses related to the revenue, showing the company’s financial progress during the particular time period.
The statement begins with the total revenue from sales of products and services followed by operating expenses related to the production of goods and services for the accounting period.
Depreciation (wear and tear in assets such as machinery, furniture, tools) is calculated and subtracted from the gross profit. Depreciation is the process of spreading the cost of the assets over their lifespan.
Interest income and expenses are then added and deducted from operating profits to find out profits before income tax. The next step is to deduct income tax from the operating profits before tax to arrive at net profit or losses, as applicable.
How to prepare a profit and loss statement
The following profit and loss formulas sum up the income statement:
- Gross margin = net sales – cost of goods sold
- Net operating profit = gross margin – operational expenses
- Net profit before tax = net operating profit + other income – other expenses
- Net profit / loss after tax = net profit before tax – income tax
It is important to note here that companies in the service industry have comparably simpler income statements as they do not sell goods and therefore, do not maintain inventory of goods. Businesses in the merchandising sector that buy and sell goods but do not manufacture them have more complex income statements as they must report purchase and sales.
Manufacturing companies have the most complex profit and loss statements as they have both production and sales to report. They must maintain a system that monitors manufacturing costs from the point of production to the point of sale. Because of this, they must use the inventory cost flow equation for raw material, the work in process and finished goods to compute the cost of raw materials used in production, cost of goods manufactured and cost of goods sold.
- Raw materials in production relates to the cost of direct and indirect materials.
- Cost of manufactured goods is the cost of goods ready for sale in finished good inventory.
- Cost of goods sold is the cost of goods sold and no longer in inventory.
Based on the following profit and loss statement example, let us look at how to prepare a profit and loss statement for a manufacturing company.
Profit and Loss Statement Example
Sample Profit and Loss Statement for ABC Manufacturing Company Ltd.
For the quarter ended March 31, 2020 | All values in Rs.
|Cost of goods sold:|
|Beginning inventory||− 85,000|
|Material purchased||− 150,000|
|Cost of goods available for sale||280,000|
|Less ending inventory||− 90,000|
|COST OF GOODS SOLD||− 190,000|
|Operating expenses (Selling, Administrative, and General
|Salaries and Wages||− 52,000|
|Other Expenses||− 6,000|
|Local Taxes||− 3,000|
|Total operating expenses||− 78,500|
|Profit From Operations||67,500|
|Other income||+ 5,000|
|Other expense||− 1,000|
|Net Profit Before Taxes||71,500|
|Provision for income tax||− 25,500|
|NET PROFIT AFTER INCOME TAX||26,000|
Notes on how to prepare a profit and loss statement
Begin with the heading. The heading of the statement is critical as it shows the company’s name, statement title and the time frame relating to the report.
The basic information required to construct a P & L Statement is as follows:
- Net sales
- Cost of goods sold / cost of sales
- Operating expenses including Selling, general and administrative expenses
- Other income and other expenses
Net sales is the total sales during the period, which in this case, is 3 months including January, February and March 2020, minus returns and sales discounts. Returns will vary depending on the nature of the business and the allowance is usually 2% of total sales. Discounts reduce the actual total sales based on prices paid by the customers vis-à-vis catalogue prices.
Under Net Sales, enter net sales minus returns and discounts.
Cost of Goods Sold
Cost of goods or cost of sales is the price of the goods minus operational expenses.Service oriented companies do not incur cost of goods as there is no inventory. Their revenue is from fees, commissions and royalties. Their cost of services is included in operating expenses.
Wholesalers and retailers in the merchandizing industry who are involved in buying and selling and do not produce goods calculate their costs
- Directly via actual price of goods sold based on inventory
The cost of goods sold is calculated from:
- Original inventory – inventory at the beginning of the accounting period
- New inventory – value of goods bought during this period
- Ending inventory – remaining inventory at the end of the accounting period.
Original Inventory + New inventory – Remaining inventory = Inventory used to produce goods
- Indirectly via estimation of sales
For manufacturers, the process is different as their costs are derived from the purchase of raw material to produce the goods along with the manufacturing costs. This can be direct and indirect costs.
Direct costs which include:
- beginning, new and closing inventory costs,
- raw material costs
- work in progress inventory and
- direct labor costs to convert raw materials into finished goods
Indirect costs include:
- Indirect labor involved in logistics and maintenance
- Factory overhead expenses including plant and machinery depreciation, electricity, insurance, property taxes, wages and other indirect staff expenses
- Materials bought but not used directly in production
If the manufactured product has packaging as part of the product, it is part of cost of goods sold. If not, it becomes a selling expense.
The cost of sales goes into the profit and loss statement after which the net income is computed.
This is derived by deducting cost of goods sold from the net sales.
Selling expenses relate to the cost of taking orders and fulfilling them. They include direct and indirect expenses related to sales and these are salaries to sales staff, costs related to the sales office, commissions paid, promotion costs, warehousing and shipping.
General and administrative expenses
These are indirect operating expenses including salaries to non-sales people, office supplies and other administrative expenses classified under “overheads” such as rent, electricity, phone bills, travel, repair and maintenance costs.
After selling, general and administrative expenses are entered in the profit and loss statement, the net operating profit can be calculated by deducting these expenses from the gross profit.
Finally, other income, other expenses and income taxes are recorded in the income statement.
Other income and other expense relate to expenses other than operational costs. This can be interest income, dividend income, rents, royalties and proceeds from the sale of capital assets. Other expenses include unforeseen losses.
To compute net profit before income tax, other expenses is added to net operating profit. From this other expenses is deducted to arrive at net profit before tax.
After assessing taxes to be paid, this is deducted from net profit before income tax to calculate net profit or loss as the case may be.
To summarize, expenses are categorized logically to determine the gross profit, operating income and net income.
If the net revenue and gains minus expenses and losses is positive, there is net income. If it is negative, it is loss.
Regardless of the size and nature of a business,the profit and loss statement is the basis on which it can analyse the feasibility of its business operations as it offers, at a glimpse, its most important activities. When it is prepared regularly at periodical intervals it places a powerful tool in the hands of the business owners enabling them run their operations efficiently.
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