A profit and loss statement (P&L) is a financial statement that summarizes a companys revenues, costs, and expenses incurred during a specified period, usually a quarter or fiscal year. It is also known as an income statement, statement of profit or loss, revenue statement, statement of financial performance, earnings statement, statement of earnings, operating statement, or statement of operations. The purpose of the P&L statement is to show managers and investors whether the company made money (profit) or lost money (loss) during the period being reported.
A P&L statement typically includes the following categories:
- Revenue or Sales
- Cost of Goods Sold (COGS)
- Gross Profit
- Operating Expenses
- Operating Income
- Other Income and Expenses
- Net Income
P&L statements are often presented on a cash or accrual basis. It is important to compare P&L statements from different accounting periods, as any changes over time become more meaningful than the numbers themselves. Company managers and investors use P&L statements to analyze the financial health of a company. A P&L statement is one of the three types of financial statements prepared by companies, the other two being the balance sheet and the cash flow statement.
