The Profit & Loss (P&L) statement, also known as the Income Statement, shows you whether your business made a profit or a loss over a specific period.
The Basic Formula
The entire P&L statement boils down to a simple formula: Revenue - Expenses = Profit (or Loss).
Key Components of a P&L Statement- Revenue (or Sales): The top line. The total amount of money generated from sales.
- Cost of Goods Sold (COGS): The direct cost of producing the goods you sold.
- Gross Profit: Revenue minus COGS. It shows how much profit you made before operating expenses.
- Operating Expenses (Overheads): The costs required to run your business (rent, salaries, marketing).
- Operating Income: Gross Profit minus Operating Expenses.
- Net Income (The 'Bottom Line'): Your final profit after all expenses and taxes have been deducted.
Using a tool like the Business Portal, you can generate a P&L statement instantly. By reviewing it regularly, you can identify trends and manage expenses to increase profitability.
