 QuickBooks Online 2024, vertical analysis, profit and loss, PNL or income statement. Get ready and relax because it's so easy using QuickBooks Online, you'd think it'd be a crime. But it's not unless you're doing bookkeeping for like porch pirates or something. But anyways, let's get into it. Here we are online in our browser searching for QuickBooks Online test drive looking for the result that has Intuit.com in the URL, Intuit being the owner of QuickBooks, selecting the United States version of the software and verifying that we're not a robot. Opening up the major financial statement reports like we do every time the reports are on the left hand side. We're in the favorites. We're going to be right clicking on that balance sheet, open link in new tab, right click on the profit and loss, open link in new tab. Let's go to that middle tab that we just opened, close up the hamburger and change the range. Going back to 2023, 010123 tab, 123123 tab, run it to refresh it. Let's tab to the right where our income statement or profit and loss is. Close the hamburger and once again go back in time. 010123 tab, 123123 tab. First a word from our sponsor. Yeah, actually we're sponsoring ourselves on this one because apparently the merchandisers they don't want to be seen with us, but that's okay whatever because our merchandise is better than their stupid stuff anyways. Like our accounting rocks product line. If you're not crunching cords using Excel, you're doing it wrong. A must-have product because the fact as everyone knows of accounting being one of the highest forms of artistic expression means accounts have a requirement, the obligation, a duty to share the tools necessary to properly channel the creative muse. And the muse, she rarely speaks more clearly than through the beautiful symmetry of spreadsheets. So get the shirt because the creative muse, she could use a new pair of shoes. If you would like a commercial free experience, consider subscribing to our website at accountinginstruction.com or accountinginstruction.thinkific.com. Run it. It's just like having a time machine, having QuickBooks just like having a time machine. So note that the income statement is our performance report as we've discussed in prior presentations as opposed to the balance sheet. We enter the date range up top which is actually reflected on the report as opposed to the balance sheet which is as of a point in time. We still have the range that we do an input on for the balance sheet and that's because when we drill down on the numbers in the balance sheet we will have a range type of report and it helps us to do our comparative types of reports. Let's go to the income statement now and now we're going to be thinking about a vertical analysis type of report. Quick comparison of the vertical analysis on the income statement versus the balance sheet. If I go back to the balance sheet we did this in a prior section. If I select the dropdown you can see there's less information in the dropdown and all we have down here is the percent of row and percent of columns. If I select the percent of columns on the balance sheet and run that one we're comparing everything to the bottom line of the balance sheet which you can see is total liabilities and equity which is equal to the total assets. So all the assets are being divided by the, I mean all the asset individual assets like the bank accounts 201 are being divided by the bottom line of each section assets equal liabilities plus equity divided by 23436.29 and that's giving us our 8.54 about. So then if I go to the income statement it's a little bit different. If I select the dropdown you can see we have these different different more at least options. So we have the percent of rows that's not going to be too helpful for us with our, with this particular report we're just going to get the 100 percent because we only have one column there but if I select the dropdown and undo that one I say we want the percent of column so let's select that one so I'll run that one. So this is not really the traditional vertical analysis that we would think of because this is comparing it to the bottom line of net income so you could see net income down here is at the 100 percent. So that there might be some uses for that because that's giving us kind of a ratio analysis of each line item both income and expense compared to the net income. So in other words if I took my income line here of 4736.47 divided by and I go down divided by the 1676.46 then we're going to get if I go back on up hold on a second if I go back on up and I move the decimal two places over we get 282.53 percent right and I could do the same thing for my expenses any of the line items and you can tell what's being used as the factor that's going to be involved in all of the ratios because it's going to be 100 percent that'll be the line that's 100 percent. So that's interesting probably not the report that we look at the most. The other one is the percent of income so if I can choose the percent of income and that's comparing to everything basically to the income line item right here. This is actually the one that we use most often. You might say well why would that be why wouldn't it be the bottom line of the report. And one of the reasons would be well the income is actually what we're trying to do. That's the goal of the business revenue generation is what we're trying to do. So what we're going to think about then is look at the total income and then think about all other line items as compared to the total income line item both income and expenses. So on the income side that of course makes perfect sense because it's kind of like what you would see over here on the assets right we're comparing each individual asset to the total assets to look at the ratio of where our assets are located that can help us with our comparisons as we benchmark to another company. Same with this side of things right if we have different types of income in our business if I was to compare to another landscaping company I'm trying to benchmark them trying to mirror them. I can't just look at my dollar amounts and really be able to tie that into what they're doing because they're larger than we are and we're trying to mirror what they're doing but we can possibly look at the percentage of our income compared to the total to see if we're lining up to the model that we're kind of projecting ourselves to be. So in this case I have the 4736.47 divided by the total income 10200.77 if I move the decimal two places over we get the 46.43 percent so we could do that all the way down and then of course all the percentages there would add up to the 100 percent right we got the so if we add these up we have for example the 22.06 minus the .88 plus the 14.48 plus 22.02 plus 23.06 plus the 4.35 plus I'm going down to here the 2.45 plus .49 plus and then we're going here the 1.08 plus the 8.95 plus 4.94 and that's going to give us our 100 percent so that makes sense but then down below you might say well why would it make sense for the expenses to be divided by the income and once again it's kind of because the income is the reason that we have the expenses the expenses are what we have to expend during the time period in order to reach our goal of revenue generation so it makes sense then for us to be comparing our expenses how much we have to expend in order to generate that revenue so for example the cost of goods sold which is usually a higher expense is usually going to be the biggest proportion to the revenue if you were a retail store it's a lot smaller here because this is kind of a landscaping business but if you were a retail store something like that you would expect the cost of goods sold to a be a significant part of a ratio compared to the income and again you can kind of compare that to another store if you were a retail store that's trying to mirror a larger retail store you can't compare total income and cost of goods sold to them because they're going to be bigger than you are because you're not going to be benchmarking or trying to emulate someone that's smaller than you are right but you can compare the ratio so if i look at this it was 405 divided by the 10200.77 that gives us our 3.97 and we can do that of course all the way down we could say how much is our advertising budget compared to our income does that line up to the industry standard how much is our automobile and so on equipment and and so on and so forth so and then then and then the net income now down here is no longer 100 percent because we're taking the net income and dividing it by the income line so the only 100 line is going to be of course the total income now the other option so that's the main one that's the one that's the key right there that you that you're most likely might run as a package of reports but we can also do the percent of expenses now this one doesn't make a whole lot of sense on the on the income side of things because now you're looking at the income compared to the expenses which seems kind of backwards but on the expense side of things you can you can think about here's your expenses and think about each line item in the expense compared to the total line item so you can see the 100 percent now is at the total expenses so I can go through all of the expenses and say well how much am I spending in comparison to everything that I'm spending or how much am I consuming in expenses compared to the total so the rent for example which is often a fairly high one 900 divided by the total expenses of five two oh three point three one and that's going to give us our if I move the decimal two places over 17.3 percent about now we could try to do all those at the same time if I select all of these boom boom and see if I can run that so now you have all three of those and you can run you know percent of expenses percent of the column net income and the percent of income on one report so that's kind of neat however these two like I say are far less common than the percent of income so most likely you're going to want to run say the percent of income one which would look like that this again I'm going to say the percent of income boom and then I would call this the profit loss I'll change it to an income statement vertical analysis analysis something like that on the title would be a common change and then also note that you could do this vertical analysis with comparative reports possibly as well or report multiple periods while including the vertical analysis right so I might say if I'm giving my reports to somebody do I want to give them an income statement and this statement which is a vertical analysis or maybe I give them a very simple income statement that is collapsed income statement that doesn't have all the subtotals and then I give them this income statement which has the percent of income column on it or I can say maybe I also include some comparative reports with this percentage of income if I hit the drop down here I could look at it by quarter for example as we saw in a prior presentation but now it's showing each quarter giving us both the line items and the percent of income for each of them and it gives us the total for the entire year and the percentage of income so this report gives you all the information as the total income statement did plus it gives you a breakout on quarter by quarter and the percentage of incomes of each as well as the total so so you got to think about well is how would I group my reports maybe you want to give them a simple income statement that is a summer income statement maybe then an income statement that has has a has a percentage to it or maybe you give them the bigger report like this that has some comparative information or possibly you give them all of the reports right and you take them along every step along the way so we run into the same concept of when you're providing the reports to the clients you have a whole lot of options in terms of what package or bundle of reports that you want to be providing which will possibly differ on a month by month quarter by quarter year by year you might have different bundles of reports for January than you would for the end of the year clearly December and you might have different reports that you might want to focus in on at the end of each quarter versus the end of each month and in a lot of the thought you might put into that is how do I want to be presenting these comparative type reports because the combinations of reports that we can do now that we have these tools of a vertical analysis and a horizontal analysis and multiple periods comparing the current period to the prior period and all that kind of stuff means that you have a whole lot of different combinations a lot of different combinations all right so I've emphasized that enough let's go back to the total run it again we would probably want to customize this thing like we normally do so we can customize up top we can say we want to remove the pennies negative numbers bracketed and then show them as red and then on the header and footer we can take out the date the time and the report basis and then run it so now we have it there income statement vertical analysis and so that looks good and then of course we might want to save it we might want to save the customization put it into a group of some kind possibly month end reports and then add it boom and then save it bam and then we can go to that first tab over here go down to the reports on the left hand side custom reports and there it is our vertical analysis that we can generate at month end