Essay Doctorate 769 words

Important elements of profit and loss statements in virtual organizations

Last reviewed: June 6, 2012 ~4 min read
Abstract

McBride Plc. has enjoyed a positive increase in its financial results, as it is best revealed throughout their most recent income statement. Starting at the end of the statement, where the costs are deduced from the incomes, it is revealed that the company has generated a net income in the amount of £22,000 thousands.

¶ … profit loss statement Virtual Organizations: • Riordan • McBride • Kudler Describe important elements, noting means company.

Profit and Loss Statement for McBride Plc.

McBride Plc. has enjoyed a positive increase in its financial results, as it is best revealed throughout their most recent income statement. Starting at the end of the statement, where the costs are deduced from the incomes, it is revealed that the company has generated a net income in the amount of £22,000 thousands. The figures are revealed in the table below:

= in thousands GBP=

Net income

Yahoo Finance, 2012

The latest net income of McBride Plc. reveals a £5,000,000 increase comparative to the previous year (2009). In 2008, the net income had been of £12,000 thousand, and in 2007, it had been of £21,000 thousand. The latest figures as such indicate an important downfall in 2008 comparative to 2007, when the company's net income had decreased to almost one half of its value in the previous fiscal year. The following years nevertheless, namely 2009 and 2010, have both revealed increases in the net incomes.

The movements in McBride's recent net incomes show that the company has been extremely sensitive to the economic crisis, the onset of which has translated into financial losses for the firm. Nevertheless, the organization proved able to recover and began to increase its net results in 2009; this result is indicative of a strong company, able to support itself and to withstand the trials of various economic cycles. In other words, the fluctuations were due to the crisis, but the recovery is due to the internal strength of the firm.

In such a setting, the 2010 net results of McBride have managed to out total the 2007 net income by £1,000,000. During the years between, the company has fought to revive its financial strength. They have managed to attain this objective, but the period from 2007-2010, when the net income only increased from £21,000 thousand to £22,000 thousand reveals an important decrease in the growth rate of the firm's profits.

While the company's net income has revealed a major decrease, followed by gradual increases in the following years, the same trend was not followed by the total revenues of the firm, nor by the gross profit at McBride. In these two instances, the company's financial results had been following a constantly ascendant path. The figures are revealed below:

= in thousands GBP=

2010

2009

2008

2007

Total revenue

812,000

792,000

701,000

393,000

Gross profit

297,000

268,000

230,000

199,000

Source: Yahoo Finance, 2012

As it is revealed in the table, the latest financial data for McBride indicate an ascendant trend in the cases of the company's revenues and gross profits, indicating that these values have been less sensitive to the crisis comparative to the net results of the firm. Still, in order to conduct a superior analysis of these features, it is insufficient to reveal the sustained ascendant trend, but it is useful to also assess the growth rates. These are computed below.

Total revenue growth rate

2007 393,000….100%

2008 701,000

2009 792,000…..y

2010 812,000…..z x = 701,000 * 100 / 393,000 = 178.34, revealing a 78.3 per cent growth rate (178.34 -- 100) of the company's total revenues in 2008 relative to 2007

y = 792,000 * 100 / 701,000 = 112.9, revealing a 12.9 per cent growth rate of the total revenues in 2009 relative to 2008

z = 812,000 * 100 / 792,000 = 102.5, revealing a 2.5 per cent growth rate of the total revenue in 2010 relative to 2009

Gross profit growth rate

2007 199,000….100%

2008 230,000

2009 268,000…..y

2010 297,000…..z x = 230,000 * 100 / 199,000 = 155.58, revealing a 55.6 per cent growth rate of the company's gross profits in 2008 relative to 2007

y = 268,000 * 100 / 230,000 = 116.5, revealing a 16.5 per cent growth rate of the gross profit in 2009 relative to 2008

z = 297,000 * 100 / 268,000 = 110.8, revealing a 10.8 per cent growth rate of the gross profit in 2010 relative to 2009

For purposes of clarity, the table below reveals the growth rates of the McBride total revenues and gross profit from 2008 to 2010.

2010

2009

2008

Total revenue

12.9%

78.3%

Gross profit

55.6%

16.5%

10.8%

However both gross profit and total revenues were able to maintain an ascend trend -- unlike the net income -- the two variables also seem to have been impacted by the crisis. In 2008 relative to 2007, the company had registered significant growths, but the growth rates in the following years had decreased.

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PaperDue. (2012). Important elements of profit and loss statements in virtual organizations. PaperDue. https://www.paperdue.com/essay/profit-loss-statement-virtual-organizations-80407

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