How do you interpret a profit & loss statement?

Interpreting the results of a Profit and Loss (P&L) statement involves analyzing the revenues, expenses, and profits/losses of a company over a specific period. A P&L statement can provide insights into a company’s financial performance, helping identify areas for improvement, cost-cutting, and sales growth opportunities.

What is a profit and loss statement (P&L)?

A profit and loss statement (P&L), or income statement or statement of operations, is a financial report that provides a summary of a company’s revenues, expenses, and profits/losses over a given period of time. The P&L statement shows a company’s ability to generate sales, manage expenses, and create profits.

Why do small businesses need a profit and loss statement?

One of the most common reasons small businesses start producing profit and loss statements is to show banks and investors how profitable their business is. When profit and loss statements are meant to be shared outside a business, they’re called income statements. A P&L statement is for internal use only.