What is a profit and loss statement?

What is a profit and loss statement?

A profit and loss statement, or P&L, summarizes revenues, costs, and expenses over a specific period, showing net profit or loss.

Why is it important for businesses?

It's crucial for assessing financial performance, making informed decisions, and attracting investors.

What are the main components of a P&L statement?

The main components include revenues, cost of goods sold (COGS), gross profit, operating expenses, and net profit.

How often should a business prepare a P&L statement?

Businesses typically prepare P&L statements monthly, quarterly, or annually, depending on their reporting needs.

Can you give me an example of a P&L statement?

Sure! A simple example would show revenues of $100,000, COGS of $40,000, operating expenses of $30,000, resulting in a net profit of $30,000.