This report calculates percentages of sales for all P&L activity for the selected month(s). These percentages are compared to what you budgeted for the selected month(s) and to what the percentages were for the same month(s) of last year.
This report can be displayed using the cash basis or accrual basis accounting method. (Cash basis versus accrual basis reporting)
Report Tip: This is a very interesting Profit & Loss report because it produces no currency amounts. This report looks at every income and expense as a percent of total sales. Most industries have guidelines for expenses as a percent of revenue. If your business is significantly over or under the industry norm, it may be a harbinger of trouble to come.
For example, if your administrative expenses are 15% of total sales and your industry average is 5%, you could be at a serious disadvantage. While you're paying for that corporate masseuse, competitors could be spending 10% more than you on sales and marketing, stealing both market share and the future of your company.
If you don't know your industry averages ask your accountant, or contact the editors of the most popular trade magazine for your industry.