A company’s statement of income is often called its profit and loss (P&🌺L) statement. It lists revenues, expenses, and net profit for the period covered. There are typically quarterly and annual P&Ls, but some companies might pu🌠blish monthly P&Ls.

Public companies produce P&L statements to meet legal reporting requirements and inform inves💫tors. The P&L is carefully review𓂃ed by market analysts, investors, and creditors to evaluate a company’s revenues, expenses, and profitability.

What Do ꦛProfit and Loss (P&am🎉p;L) Statements Show?

A P&L statement contains details ab🧔out a company’s financial circumstances. It generally has the following sections:

• 澳洲幸运5官方开奖结果体彩网:Revenues: The total amount of income from the sale of goods or services associated with the company’s primary operations.
• Expenses: Costs deducted from revenue, such as the 澳洲幸运5官方开奖结果体彩网:cost of goods sold (COGS), wages, rent, marketing, administration costs, utilities, interest expenses, and 澳洲幸运5官方开奖结果体彩网:depreciation.
• Gains: Any gains during the period, such as selling unused equipment.
• Losses: Any losses incurred in the period.
• 澳洲幸运5官方开奖结果体彩网:Net Income: While not necessarily a section on its own, this line item shows what was earned after accounting for everything. It is also known as the 澳洲幸运5官方开奖结果体彩网:bottom line.

Due to how comprehensive it can be, the P&L statement paints a clear picture of how much money a company makes and spends. It also highlights whether the company was profitable or suffered a loss.

Why Profit and Loss (P&a💙mp;L) Statements Are Public

P&L statements are made available to the public for a variety of reasons. First, public companies in the United States are required to file their financial statements with the 澳洲幸运5官方开奖结果体彩网:Se💦curities and Exchange Commission (SEC🅘). The inner financial workings of a company are of great interest to numerous people, including accountants, economists, and investors.

Even business owners need a comprehensive understanding of a company’s financial events and results. The P&L and other 澳洲幸运5官方开奖结果体彩网:financial statements can help them identify unnecessary expenditures, opportunities to in🌟😼crease revenue, and other ways to improve performance.

For all of these professionals, assessing a company’s financial strength means taking a detailed look at 澳洲幸运5官方开奖结果体彩网:total revenue, expenditures, the amount of debt or leverage, additional investments, secondary operations, and tax burdens🎀.

Financial statements, including the P&L, can help businesses understand current performance relative to projections and create realistic forecasts. They can also help business owners and investors compare aౠ business’s performance against competitors.

How Investors Use ꦯProfit and Loss (P&L) Statements

Investors and lenders use data from P&L statements to determine a company’s 澳洲幸运5官方开奖结果体彩网:profitability and 澳洲幸运5官方开奖结果体彩网:risk level. For example, companies must provide evidence of their financial standiꦛng and ability to make consistent payments to apply for loans.

If the P&L statement reflects that a company does not generate enough 澳洲幸运5官方开奖结果体彩网:operating income to adequately cover current loan payments, banks are less likely to loan additional funds. Sometimes, a downturn in income could signal loan default.

If you’re an investor making important investment decisions, be sure to compare the P&L statements of companies that are similar in size and within the same 澳洲幸运5官方开奖结果体彩网:industry or sector. This gives you an apples-to-apples comparison. Comparing the financial statements of a large 澳洲幸运5官方开奖结果体彩网:pharmaceutical company with those of a small energy company doesn’t make sense, as t꧅hey have different factors that play into their reven📖ues and expenses.

Example of a Profit and Loss (P&L) Stat🙈ement

Some companies publish their P&L statements under that name. Others may use different terms to describe the same thing. Consider Pressure BioSciences (PBIO), whi💦ch calls its P&L a 🎉statement of operations.

The image below shows how the P&L statement or, in this case, the statement of operations is broken down:

This particular statement is broken into three sec�🐬�tions:

• Revenue
• Costs and Expenses
• Other (Expense) Income

It then lists net losses and shareholder information at the bottom. The total value under the expense category is subtracted from the total value of the company’s revenue, resulting in an 澳洲幸运5官方开奖结果体彩网:operating profit if the result is positive or an 澳洲幸运5官方开奖结果体彩网:operating loss if it’s negative.

The Bottom Line

A P&L statement shows investors and other interested parties the amount of a company’s profit or loss. Revenue and expenses are shown when they occur, not when the money actually moves into or out of the company’s b🦩ank account. The P&L statement is often the most sought-after financial document because it shows whether a company is profitable.