Pulse May 2019 - Page 35

When it comes to spa financial management, there’s one chart that matters most to spa directors: the profit-and-loss (P&L) statement, also known as the income statement. The P&L is also frequently named as a point of confusion for spa directors both new and old. Let’s take a look at a sample P&L from Financial Management for Spas and break it down to get to the heart of what it can tell you about your spa’s performance. any sPa statement of income (short version) for month ending march 31, 20xx net revenue $00285,058 total direct expenses 00181,116 gross margin 103,942 total indirect and undistributed expenses 69,908 income Before fixed charges 0034,034 fixed charges 007,417 income Before depreciation, amortization, interest expense, & income taxes 6,667 Interest Expense (Gain) and Loss on Disposal of Property income taxes net income This P&L is based on the practices and standards of the Uniform System of Financial Reporting for Spas (USFRS). Indirect and Undistributed expenses include marketing, administrative costs, maintenance, utilities, support labor, and other expenses that are difficult to tie to any particular department. for example, it’s tough to track the cost of robes used for massages and facials separately; instead, that’s considered an undistributed expense. 26,617 Depreciation and Amortization income Before income taxes your spa’s gross margin is indicated here, and is the result of taking net revenue (the amount of money made from goods and services) and subtracting total direct expenses (the cost to sell or provide those goods and services). 2,500 (4,167) 21,617 6,250 $00015,367 We’ve arrived at the end—net Income! When all is said and done, net income is the amount of profit pocketed by the spa during this accounting period. it would be unusual for a spa director to be responsible for these numbers, but it’s still important to know what they are. here, the P&L shows depreciation of assets, as well as amortization of any intangible assets. it also shows gains and losses, which are different from profit and loss resulting from opera- tions. an example of a loss would be damage caused by a flood, hurricane or other act of nature. at this point, a P&L shows Income Before Income taxes, then subtracts any income tax. it’s worth it to note that, according to Financial Management for Spas, income taxes listed on a P&L are rarely the same as those shown on a tax return due to differences in accounting methods. MAY ■ PULSE 2019 33