sample profit and loss statement

A Profit & Loss Statement (P&L) measures the activity of a business over a period of time – usually a month, a quarter, or a year. This financial report may have several different names: profit & loss, P&L, income statement, statement of revenues and expenses, or even the operating statement. The P&L basically tells you revenue, expenses, profit, and loss. Keep in mind that in almost all circumstances, profit is not the same thing as cash flow.

The basic formula for the P&L statement is: Revenues – Expenses = Net Profit

Profit and loss statements generally follow this format:
Total Revenue
Minus (-) Operating (variable) Expenses
= Gross Profit
Minus (-) Overhead (Fixed Expenses)
= Operating Income
Plus (+) / Minus (-) Other Income or Expenses (Non-Operating)
= Pre-Tax Income
Minus (-) Income Taxes
= Net Income (After Taxes)
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definitions of these categories

Revenue is the money you receive in payment for your products or services.

Operating, or variable, expenses are the expenses that rise or fall based on your sales volume.

Gross profit margin or operating margin is the amount left when you subtract operating expenses from revenues.

Overhead, or fixed, expenses are costs that don’t vary much month-to-month and don’t rise or fall with the number of sales you make. Examples might include salaries of office staff, rent, or insurance.

Operating income is income after deducting operating and overhead expense.

Other income or expenses (non-operating) generally don’t relate to the operating side of the business, rather to how the management finances the business. Other income might include interest or dividends from company investments, for example.  Other expenses might include interest paid on loans.

Pre-tax income is income before federal and state governments take their share.

Income taxes How income tax is shown on the P&L varies based on the type of legal entity.  For example, a C corporation almost always shows income tax expense, but S corporations, partnerships, LLCs, and sole proprietorships rarely show income tax expense on the P&L.

Net income (after taxes) is the final amount on most profit-and-loss statements. It represents the net total profit earned by the business during the period, above and beyond all related costs and expenses.

sample profit and loss statement