I realize I'm kind of lumping an income statement and statement of cash flows together, but this is still the easier way of doing things for my particular use case.
I'm trying to do an income statement proforma. In the scenario that I'm modeling, revenues are positively effected because of a change in location. However, that change in location has costs (e.g., rent) that must be financed by a commercial loan. I'm trying to get a final monthly net profit figure, one that already incorporates the monthly debt repayment. For sake of example, let's use Month 1:
- Revenue $100K
- Rent $5K
- Monthly loan repayment $3K (calculated based on loan terms), this consists of
- $1K interest
- $2K principal
- All other costs = $80K
I'm trying to figure out how to account for the various costs without being redundant. It seems there are 2 ways of doing this:
Account for Rent and Interest, but NOT the principal payment since that is essentially what you've used to pay Rent. This seems to fit more in line with a standard income statement that has an interest line.
Revenue 100 Costs - 80 Rent - 5 Interest - 1 Net = 14
Ignore Rent, but show the entirety of the monthly loan repayment. This is not very standard, but the benefit is that it clearly lays out the actual cash cost obligations. Because the received loan money is what is used to cover the rent, and revenues are used to cover repaying that loan.
Revenue 100 Costs - 80 Repay - 3 Net = 17
Would LOVE some pro advice!