From the General Ledger to the Management Income Statement

The Starting Point: Entries

Accounting records each transaction in accounts. In France, the general chart of accounts (PCG) organizes these accounts into classes: class 6 groups expenses, class 7 groups revenue. The first two digits specify the nature:

Prefix	Nature
70	Sales (revenue)
60	Purchases
61, 62	External services (rent, fees, telecoms…)
63	Taxes and duties
64	Personnel costs
68	Depreciation, amortization and provisions

A management controller doesn’t present hundreds of accounts to management: they group them into readable line items. To do so, they rely on a written, shared mapping table that can be reviewed and audited.

The entries in this course are simplified: one positive amount per account per month, with no stock variation or closing entries.

Building the Mapping Table

MAPPING = {
    "70": "Chiffre d'affaires",
    "60": "Achats consommés",
    "61": "Charges externes",
    "62": "Charges externes",
    "63": "Impôts et taxes",
    "64": "Charges de personnel",
    "68": "Dotations aux amortissements",
}

def rubrique(account):
    return MAPPING.get(str(account)[:2], "Hors compte de résultat")

entries["rubrique"] = entries["account"].map(rubrique)

The default value "Hors compte de résultat" (“outside the income statement”) catches balance sheet accounts (class 5 for cash, class 4 for third parties…) that have no place in an income statement. If it shows up in your results, it is a signal to investigate, not a line to ignore.

The Monthly Income Statement

pnl = entries.pivot_table(index="rubrique", columns="month", values="amount", aggfunc="sum", fill_value=0)

One row per line item, one column per month: this is the expected shape of a monthly report. An essential check: the sum of pnl must equal the sum of the entries in scope. A difference means an entry was lost or counted twice.

Intermediate Balances, in a Simplified Version

The income statement is read as a cascade. Each balance removes one category of expenses and answers a question:

def sig(m):          # m: dictionary of line item -> amount for one month
    marge_brute = m["Chiffre d'affaires"] - m["Achats consommés"]
    valeur_ajoutee = marge_brute - m["Charges externes"]
    ebe = valeur_ajoutee - m["Impôts et taxes"] - m["Charges de personnel"]
    resultat_exploitation = ebe - m["Dotations aux amortissements"]
    return {"marge_brute": marge_brute, "valeur_ajoutee": valeur_ajoutee,
            "ebe": ebe, "resultat_exploitation": resultat_exploitation}

print(sig(pnl["2026-01"].to_dict()))
# gross margin 30,000, value added 26,000, EBE 10,500, operating income 8,500

• The gross margin (here a trading margin, since the company resells goods) tells you what is left after paying for the products sold.
• Value added measures the wealth created by the company after its external consumption.
• The EBE (gross operating surplus, excédent brut d’exploitation) measures what operations generate before depreciation and amortization, financial costs and tax. It is a closely watched indicator because it depends little on investment and financing choices.
• Operating income deducts the wear of investments (depreciation and amortization charges).

The official definition of the intermediate management balances includes other items (production, stock variation, operating subsidies, reversals, other income and expenses); this course keeps their structure for analysis.

Relating to Revenue

A balance is compared from one month to the next as a percentage of revenue: an EBE rate of 21% in January and 26.7% in February shows that fixed costs (personnel, rent) were better absorbed by higher revenue. This is what is called operating leverage.

Key Takeaways

• Class 6 accounts are expenses, class 7 accounts are revenue; the prefixes give the nature.
• A documented mapping table turns entries into line items.
• Balances are computed as a cascade and read as a percentage of revenue.