PnL stands for Profit and Loss, which is a financial metric used to determine the net profit or loss of an individual or company over a specific period. It is a critical financial statement in investment banking, where it is used to explain the daily fluctuation in the value of a portfolio of trades to the root causes of the changes. In business, P&L statements are financial documents that show a companys revenue, cost of goods sold, gross profit, operating expenses, operating profit, and net profit. PnL can be calculated using various methods, such as FIFO, LIFO, and MTM. There are two types of PnL: realized PnL and unrealized PnL. Realized PnL is the profit or loss generated from a completed or closed trade, while unrealized PnL refers to the profit or loss that is currently held in open positions but has not yet been realized through closing the position. PnL is an important risk management tool that helps make decisions based on objective data.