INCOME STATEMENT / PROFIT & LOSS STATEMENT (P&L)

Expenses or Debits (Formal Definition)- Investopedia state an expense is the cost of operations that a company incurs to generate revenue.

Expenses or Debits (Stated Plainly) – Money you spent on your operation….

*Its easy to lose track of expenses. It is very important that EVERTHING spent is tracked for both tax and operational purposes. If you don’t have accurate expenses, you cannot figure out how much it costs to produce one pound of lamb. I will save technicalities for a later date but if you can’t calculate what it costs you to produce one pound of lamb to the penny, most likely you are losing money.

Short story, my first P&L was a page out of a notepad that my grandmother gave me in high school. It was really sophisticated…., it had flowers on top and horizontal lines evenly down the page. My line items were the listed as simple as hay / $ or feed / $. Every time I would go to the feed store, I would take it out of my wallet, fill it out and fold it back up. It wasn’t much but it worked. I tell you all this because it doesn’t really matter all that much how you track it, it just needs to be accurate. *

Income or Credits (Formal Definition) – Investopedia states income is the money that a person or entity receives in exchange for their labor or products.

Income or Credits (Stated Plainly) – What you receive from selling lambs, hay etc.

*This is a category that most people are good at getting right. For some reason, sales are the easiest part of the business for producers to keep up with. It is good to keep record of sale weights, price per pound and deductions. Keeping this helps in tax season and helps you avoid miscalculating your take home cash.

Net Income (Formal Definition) - Investopedia states net income also called net earnings, is calculated as sales minus cost of goods sold, selling, general and administrative expenses, operating expenses, depreciation, interest, taxes, and other expenses. It is a useful number for investors to assess how much revenue exceeds the expenses of an organization. This number appears on a company’s income statement and is also an indicator of a company’s profitability.

Net Income (Stated Plainly) – Profit…the amount of cash you made in a year …. kind of.

*You will notice that I said… kind of. Net income includes expenses that are ridiculous to most producers such as depreciation. We won’t go into what depreciation is… how accountants use it and the endless opinions that exist on the item. What you should know is that depreciation is a real expense, but it is not a cash expense so including it makes it confusing for most producers. A better and more accurate calculation of a farms take home cash is operating profit

* To keep things simple, your P&L does not have depreciation unless your accountant prepares one for you. If it does, just add the depreciation back to your bottom line (net income) and that will give you an indication of what you made for a year.

I hope this information is found to be useful. Furthermore, I hope everyone has professionals that can help them through all the specifics of their farm documents. I’m certain that I will see many of you around at our Dorper events. If there is anything I can do to help you, please reach out.

Thank You,

Lance Weaver The Sheep Farming Banker Elmdale Dorpers

Great Lakes Region Dorper And White Dorper Association

https://www.facebook.com/groups/240954492995945/

CONTACT

Ron Waldron Cell • 937.215.2411

Email • eaststarlivestock@gmail.com

Texas Hill

https://thcdorper.com/ https://www.facebook.com/groups/1450205991946735

CONTACT

President - JR Howard Cell • 325.812.8558

Email • jrhoward19@hotmail.com

Mid American Dorper

https://www.midamericandorper.com/ https://www.facebook.com/MADBreeders

CONTACT

President - Tom Clark Cell • 313.825.3470

Email • tlclark@whetstoneprairie.com

ASSOCIATION https://www.facebook.com/groups/westernstatesdorpers/

CONTACT

President - Kevin Gamble Cell • 919.605.5815

Email • kevin.gamble@codorpere.com

MID-SOUTH

https://www.facebook.com/groups/1508782966039906/ CONTACT

President - Dale Carter Cell • 912.240.0427

Email • dalecarter704@gmail.com http://www.chisholmtraildorpers.com/aboutus.html https://www.facebook.com/groups/ chisholmtraildorpers

CONTACT

President - Edie McDaniel Cell • 512.484.0392

Email • edie@mbarwwhitedorpers.com