PROFIT AND LOSS STATEMENT Business: Thornfield Bakery & Café Period: Q1 2025 (January – March) Currency: United States Dollar (USD) Date Prepared: May 2026 ════════════════════════════════════ ───────────────────────────────────────────────────── KEY FIGURES SNAPSHOT ───────────────────────────────────────────────────── Total Revenue ...................... $60,000.00 Gross Profit ....................... $41,500.00 Gross Profit Margin ................ 69.17% EBIT ............................... $11,450.00 Total Operating Expenses ........... $30,050.00 Net Profit / Loss .................. $11,450.00 Net Profit Margin .................. 19.08% ───────────────────────────────────────────────────── REVENUE ───────────────────────────────────────────────────── In-store food & beverage sales ..... $38,400.00 ... 64.00% Wholesale supply to local hotels ... $12,600.00 ... 21.00% Custom cake & event orders ......... $7,200.00 .... 12.00% Online merchandise ................. $1,800.00 ..... 3.00% ───────────────────────────────────────────────────── TOTAL REVENUE ...................... $60,000.00 ───────────────────────────────────────────────────── REVENUE MIX ANALYSIS Top Revenue Driver: In-store food & beverage sales at 64.00% Concentration Risk: FLAGGED. In-store food and beverage sales represent 64.00% of total revenue, exceeding the 60% concentration threshold, which means that any disruption to foot traffic, local trading conditions, or in-store capacity, such as a temporary closure, rent dispute, or shift in consumer behaviour, could eliminate the majority of the business's income with no alternative revenue stream large enough to compensate. Growth Recommendation: The wholesale supply channel at 21.00% of revenue presents the strongest near-term growth opportunity, as expanding the hotel and hospitality client base requires no additional physical infrastructure and can meaningfully reduce the business's dependence on in-store traffic. ───────────────────────────────────────────────────── 2. COST OF GOODS SOLD ───────────────────────────────────────────────────── Ingredients & raw materials ........ $14,200.00 ... 23.67% Packaging & disposables ............ $2,400.00 ..... 4.00% Contract baker labour .............. $1,900.00 ..... 3.17% ───────────────────────────────────────────────────── TOTAL COST OF GOODS SOLD ........... $18,500.00 COGS as % of Revenue: Formula: $18,500.00 / $60,000.00 x 100 Result: 30.83% ───────────────────────────────────────────────────── 3. GROSS PROFIT ───────────────────────────────────────────────────── Formula: $60,000.00 - $18,500.00 GROSS PROFIT ....................... $41,500.00 Gross Profit Margin: Formula: $41,500.00 / $60,000.00 x 100 Result: 69.17% ───────────────────────────────────────────────────── 4. OPERATING EXPENSES ───────────────────────────────────────────────────── Rent (storefront + kitchen) ........ $6,900.00 .... 11.50% Full-time staff salaries ........... $18,300.00 ... 30.50% Marketing & social media ........... $1,400.00 ..... 2.33% POS software & platform fees ....... $520.00 ....... 0.87% Utilities .......................... $1,850.00 ..... 3.08% Insurance .......................... $480.00 ....... 0.80% Accounting & bookkeeping ........... $600.00 ....... 1.00% ───────────────────────────────────────────────────── TOTAL OPERATING EXPENSES ........... $30,050.00 Operating Expense Ratio: Formula: $30,050.00 / $60,000.00 x 100 Result: 50.08% ───────────────────────────────────────────────────── 5. EBIT ───────────────────────────────────────────────────── Formula: $41,500.00 - $30,050.00 EBIT ............................... $11,450.00 EBIT Margin: Formula: $11,450.00 / $60,000.00 x 100 Result: 19.08% ───────────────────────────────────────────────────── 6. NET PROFIT / LOSS ───────────────────────────────────────────────────── Formula: EBIT minus any applicable interest or tax Note: No interest or tax figures were provided in the inputs. Net profit is reported at the EBIT level. The business owner should apply any applicable tax liability to arrive at the post-tax net profit figure. NET PROFIT ......................... $11,450.00 Net Profit Margin: Formula: $11,450.00 / $60,000.00 x 100 Result: 19.08% ───────────────────────────────────────────────────── 7. KEY FINANCIAL RATIOS ───────────────────────────────────────────────────── Gross Profit Margin: Formula: $41,500.00 / $60,000.00 x 100 Result: 69.17% Benchmark: Healthy small business target above 40% Assessment: Thornfield Bakery & Café significantly exceeds the benchmark at 69.17%, reflecting strong product pricing relative to direct production costs and an efficient cost of goods structure across all four revenue streams. Operating Expense Ratio: Formula: $30,050.00 / $60,000.00 x 100 Result: 50.08% Benchmark: Healthy small business target below 35% Assessment: At 50.08%, the operating expense ratio substantially exceeds the 35% benchmark, driven primarily by the full-time staff salary line of $18,300.00 which alone represents 30.50% of revenue and is the single most material cost management challenge the business faces. Net Profit Margin: Formula: $11,450.00 / $60,000.00 x 100 Result: 19.08% Benchmark: Healthy small business target above 10% Assessment: The net profit margin of 19.08% comfortably exceeds the 10% benchmark, which is a strong result for a small food service business, though it is important to note that this figure is pre-tax and the post-tax margin may fall closer to or below the benchmark depending on the applicable tax rate. COGS Ratio: Formula: $18,500.00 / $60,000.00 x 100 Result: 30.83% Benchmark: Healthy small business target below 50% Assessment: The COGS ratio of 30.83% is well within the benchmark threshold, indicating that the business is managing its direct production costs effectively and that the gross margin is being protected at the product and service delivery level. ───────────────────────────────────────────────────── 8. FINANCIAL HEALTH SCORE ───────────────────────────────────────────────────── Gross Profit Margin: 69.17% — above benchmark — 2.5 points Operating Expense Ratio: 50.08% — above benchmark — 0.5 points (significantly above the 35% target) Net Profit Margin: 19.08% — above benchmark — 2.5 points COGS Ratio: 30.83% — below benchmark (healthy) — 2.5 points FINANCIAL HEALTH SCORE: 8 / 10 Rating: Strong Financial Position Score Explanation: Thornfield Bakery & Café enters Q1 2025 in a genuinely strong financial position, with three of its four key ratios comfortably outperforming their benchmarks and a pre-tax net profit margin nearly double the healthy small business target. The primary area requiring management attention is the operating expense ratio at 50.08%, almost entirely attributable to a staff salary cost of $18,300.00 that consumes nearly a third of all revenue and will compress profitability significantly if revenue were to fall in any future quarter. ───────────────────────────────────────────────────── 9. RED FLAG DETECTOR ───────────────────────────────────────────────────── Red Flag 1: Issue: Operating Expense Ratio at 50.08%, against a benchmark target of below 35% Why it matters: A ratio 15 percentage points above the healthy benchmark means that more than half of every dollar of revenue earned is consumed by operating expenses before any profit is counted, leaving the business with very limited resilience if revenue declines in a future period. Immediate action: Conduct a line-by-line operating expense review with a specific focus on the $18,300.00 staff salary figure, which at 30.50% of revenue is the dominant driver; assess whether current staffing levels and rostering are aligned with actual peak demand patterns across the three-month period. Red Flag 2: Issue: Revenue concentration risk — in-store food and beverage sales at 64.00% of total revenue, exceeding the 60% concentration threshold Why it matters: A business that generates nearly two-thirds of its income from a single channel is structurally exposed to any disruption affecting that channel, and for a retail café operation, factors such as location accessibility, lease changes, or reduced foot traffic can materialise quickly and without warning. Immediate action: Set a formal Q2 target to grow the wholesale hotel supply channel by at least 15 to 20 percent by identifying and approaching two or three additional hospitality accounts within the local area, which would meaningfully reduce the in-store concentration percentage without requiring new infrastructure. Red Flag 3: Issue: Online merchandise revenue at $1,800.00, representing only 3.00% of total revenue Why it matters: While not a financial risk in isolation, the extremely low contribution of the online merchandise channel relative to its potential suggests it is either underdeveloped or underpromoted, representing a missed low-overhead revenue opportunity that could improve both income diversification and the overall concentration risk profile. Immediate action: Allocate a defined portion of the existing $1,400.00 quarterly marketing budget specifically to online merchandise promotion across social channels, testing whether targeted digital content around branded products can at least double this channel's revenue contribution in Q2 without any increase in the current marketing spend total. ───────────────────────────────────────────────────── 10. STRATEGIC RECOMMENDATIONS ───────────────────────────────────────────────────── The operating expense ratio of 50.08% is the most financially significant challenge identified in this period's figures, and addressing it must be the highest priority action entering Q2. Staff salaries at $18,300.00 represent 60.90% of total operating expenses and 30.50% of revenue; the business should complete a staffing efficiency audit that maps labour hours against revenue-generating periods to identify whether scheduling optimisation, role restructuring, or a shift in the staff mix between full-time and part-time could reduce the salary cost by even 10 to 15 percent, which would save between $1,830.00 and $2,745.00 per quarter and push the operating expense ratio meaningfully below 48%. The gross profit margin of 69.17% is a significant commercial strength that should be actively protected. Ingredients and raw materials at $14,200.00 represent 23.67% of revenue and are the largest single cost item on the entire statement; the business should undertake a supplier pricing review and, where possible, negotiate volume-based terms or consolidate purchases across the wholesale and in-store channels together, as the combined purchasing scale of $60,000.00 in quarterly revenue provides more negotiating leverage than either channel would individually. To reduce the 64.00% revenue concentration in the in-store channel and improve the resilience of the overall business model, Thornfield Bakery & Café should formalise its wholesale growth strategy in Q2 with specific account targets and a minimum new client acquisition goal. The custom cake and event order channel at 12.00% of revenue also demonstrates that the business has specialist capabilities the market values; a structured campaign targeting corporate and community event organisers, building on the existing $1,400.00 marketing budget, could grow this higher-margin channel without proportional increases in the COGS ratio, given that contract baker labour at $1,900.00 scales efficiently against order volume. ───────────────────────────────────────────────────── DISCLAIMER This statement is based on figures provided by the user and is intended for internal planning purposes only. It does not constitute certified financial reporting or accounting advice. Consult a qualified accountant for audited financial statements and formal reporting. ───────────────────────────────────────────────────── Prepared for: Thornfield Bakery & Café Period: Q1 2025 (January – March) Currency: United States Dollar (USD) ════════════════════════════════════