Profit and Loss Statement (P&L)

A Profit and Loss Statement (P&L) is a financial statement that summarises the revenues, costs, and expenses incurred during a specific period of time, usually a fiscal quarter or year. The P&L statement is a barometer for the financial performance of a company as it helps assess whether a business is profitable or not.

For example, a company’s P&L statement may show that it had total revenues of $100,000 and total costs of $90,000 during the period. The company’s net profit or loss would be calculated as follows:

Net Profit/Loss = Total Revenues - Total Costs

In this example, the company’s net profit would be $10,000.

The P&L statement is an important tool for investors, analysts, and business owners as it provides an indication of the financial health of the business. It can also be used to compare the performance of a company against its competitors.