Definitive Business Plan, Second Edition, The

Other income and expenditure

We are not quite finished. There is a small matter of other income and expenditure to consider. There are four categories.

1. Contingency – an allowance for unexpected costs.

2. Investment income – primarily income on shares in other companies.

3. Interest – received on bank deposits and paid to bank.

4. Taxation.

Why include them?

The box opposite shows how they build up in the profit and loss account. You can also look back at Fig. 9.7 to see profit before contingency. Some people do not bother to show this line. I think that it helps when you come to monitor spending against budgets for the following reasons.

Contingency

You cannot predict the future with certainty. The contingency reserve provides a margin for error. It is here ...