What is a P&L?

Your coaches introduce a monthly financial report that’s critical to any business.

LuisOne important way to track the performance of your business is to produce a monthly report that shows your financial results — how much money the business brought in, how much it spent, and how much money you earned or lost. This is called a Profit & Loss Statement, or P&L, for short.

MichaelYou may hear this report called by different names: income statement, earnings report, statement of revenues and expenses, or even the operating statement. But no matter the name, a P&L measures the activity of a business over a period of time — usually a month, a quarter, or a year — and recaps the revenue, expenses, profit, and loss.

LuisAs a business owner, it’s important to keep in mind that in almost all circumstances, profit is not the same thing as cash flow. In other words, “making money” doesn’t necessarily mean that you have the cash in-hand, available to spend.

The basic formula for a Profit & Loss Statement: Revenues — Expenses = Net Profit

Click the Next button to review the financial language that appears on a typical P&L.