A person is working with charts and coins to bc data mexico represent someone working on financial health
DRE, as its acronyms abbreviate, is the Income Statement. In other words, it is a document that shows the financial result that a company had after having gone through all the accounting processes – or movements –, totaling profit or loss.
This document is mandatory for all companies every year, as it is where the government analyzes whether the taxes being paid to it are actually compliant. However, it can be used for much more than that, helping entrepreneurs understand where their profits or losses came from, the economic bottlenecks in their business and even the opportunities they can take advantage of.
It seems simple, doesn't it? But to achieve this end result, it is necessary to have a broad knowledge of all the accounting processes that a business goes through and the documentation for each of them.
HOW TO MAKE A DRE?
Firstly, to prepare the DRE, a series of sequential calculations are performed, each one being the basis for the other and, in the end, generating the final result. Throughout these calculations, several analyses can be made of how the accounting process is behaving and affecting the company's financial health.
Now, to make it easier to understand, see the following figure:
A pamphlet explaining "The path that the DRE takes" thus explaining the DRE that was explained in the introduction that is linked to financial health
1. Document and organize your company data:
In principle, no accounting process can be carried out without data to support it and give credibility to the result that will be found. Therefore, the more historical data that is collected, the greater the reliability of the analysis that will be performed. Furthermore, greater organization always allows for greater depth and detail in these analyses, ensuring even greater quality and usability of the result that is being sought.
A good suggestion for organizing this data is through electronic spreadsheets, separating inputs and outputs and classifying them.
2. Know your gross income:
Gross revenue or sales revenue is everything that is received in monetary value or in direct payments. Basically, it is all the company's income and, to know what they are, it is enough to have documented the receipt processes that occurred throughout the company's financial year.
3. Determine your net income:
By defining gross revenue and knowing the company's deductions and allowances, it is possible to calculate net revenue using the following formula:
NET REVENUE = GROSS REVENUE – DEDUCTIONS AND DISCOUNTS
And what are these deductions and allowances? Deductions and allowances are everything that is discounted directly from the sales value, i.e. promotions, returns, sales taxes, etc.
Next, net revenue allows you to more realistically analyze how much income your product, merchandise or service generates.
4. Calculate gross profit and relate it to financial health:
Gross profit is the monetary value resulting from everything that is directly linked to your object of sale – product, merchandise or service -, that is, it is your net revenue minus the costs involved (taking costs as direct expenses related to the object of sale).
Since the expenses involved are not considered, your analysis refers to the sales themselves and not to the general operation of the company. Therefore, if the gross profit result is negative, it is very likely that your company's financial health is being bottlenecked by low sales or high sales costs.
