What is a profit and loss statement?

The income statement (P&L) is a financial statement that summarizes the income, expenses, and expenses incurred during a specified period, usually a quarter or fiscal year. Profit and Loss: These records provide information about the company’s ability or not to generate profit by increasing revenue, reducing costs, or both. or income statement, profit and loss statement, or expense statement.

Profit and loss management refers to the way a company manages its income statement through revenue and cost management.

 

important issues

  • The income statement is a financial statement that summarizes the income, costs, and expenses incurred over a specified period.
  • The income statement is one third of the financial statements every public company releases quarterly and annually, along with the balance sheet and cash flow statement.
  • It is important to compare income statements from different accounting periods because changes in revenue, operating costs, research and development expenses, and net profit over time are significant. means more than numbers
  • When combined with the balance sheet and cash flow statement, the income statement provides insight into a company’s financial performance.

Understanding the Income Statement (P&L)

Income statement (P&L) 1

The P&L statement is one of the three financial statements every public company issues quarterly and yearly, along with a balance sheet and cash flow statement.It is often the most popular and popular financial statement in a business plan because it shows. Quickly see whether the profit or loss was generated by the business.

The income statement, like the cash flow statement, shows the changes in accounts over a period of time, whereas the balance sheet as a whole shows how much a company owns and owes over a single period. This is because under the accrual accounting method, companies can record revenue and expenses before cash changes hands.

The income statement follows a general format as seen in the example below: it begins with an item for revenue called the top line and subtracts the cost of doing business, including the cost of goods sold, overhead. Operations Expenses Taxes and Interest The Difference Also Known As Profit Is Net Profit Also Known As Profit Or Profit You can find many templates for creating a personal or business statement online for free.

It’s important to compare income statements from different accounting periods because changes in revenue, operating expenses, research and development, and net profit over time are more significant than numbers. The company may increase, but expenses may increase at a faster rate.

 

Sample Income Statement (P&L)

Below is Caterpillar Inc’s earnings or income statement for 2013 and 2014 (all figures are in US dollars except per-share data):

twelve months ending December 31 2014 2013
Sales and Revenue:
Energy and transportation machinery sales 52142 52694
Income of financial products 3,042 2962
Sales and total revenue 55184 55656
Operating costs:
Cost of Goods Sold 39767 40727
Sales, general and administrative expenses 5697 5547
R&D cost 2,135 2,046
Interest payment of financial products 624 727
Operating Expenses (Income)Other 1,633 981
Total operating costs 49856 50028
Operating Profit 5328 5,628
Interest expenses exclude financial products 484 465
other income (cost) 239 (35)
Total profit before tax 5083 5,128
Provision (benefit) for income tax 1,380 1,319
Total Company Profit 3703 3809
An interest in the profit (loss) of a subsidiary company 8 (6)
Profit of the consolidated company and its affiliates 3,711 3803
Less: profit (loss) attributable to non-controlling interests 16 14
Profit [Footnote 1: Profit attributable to common shareholders] 3,695 3,789
earnings per common stock 5.99 5.87
Earnings per common share – diluted [Footnote 2: Diluted by exercise of share-based compensation awards using share repurchase method] 5.88 5.75
Weighted average number of common shares (million)
– Basic 617.2 645.2
– Dilute [See footnote 2] 628.9 658.6
Cash dividends announced per common share 2.70 2.32

One can use the income statement to calculate several metrics, including gross profit margin, operating profit margin, net profit margin, and operating ratios, and when combined with the balance sheet and cash flow statement, the income statement provides information. An in-depth look at the company’s financial results.

Article Source – Investopedia.com