Category

Explanation

Revenue

The revenues (sales) during the period are recorded here. Sometimes referred to as the "top line" – revenue shows the total value of sales made to customers

Cost of sales

The direct costs of generating the recorded revenues go into "cost of sales". This would include the cost of raw materials, components, goods bought for resale and the direct labour costs of production.

Gross profit

The difference between revenue and cost of sales. A simple but very useful measure of how much profit is generated from every £1 of revenue before overheads and other expenses are taken into account. Is used to calculate the gross profit margin (%)

Distribution & administration expenses

Operating costs and expenses that are not directly related to producing the goods or services are recorded here. These would include distribution costs (e.g. marketing, transport) and the wide range of administrative expenses or overheads that a business incurs.

Operating profit

A key measure of profit. Operating profit records how much profit has been made in total from the trading activities of the business before any account is taken of how the business is financed.

Finance expenses

Interest paid on bank and other borrowings, less interest income received on cash balances, is shown here. A useful figure for shareholders to assess how much profit is being used up by the funding structure of the business.

Profit before tax

Calculated as operating profit less finance expenses

Tax

An estimate of the amount of corporation tax that is likely to be payable on the recorded profit before tax

Profit attributable to shareholders

The amount of profit that is left after the tax has been accounted for. The shareholders then decide how much of this is paid out to them in dividends and how much is left in the business ("retained earnings" in the equity section of the balance sheet)