A profit and loss statement, also known as an income statement or a statement of operations, is a financial statement that summarizes a company's revenues, expenses, and profits over a specific period of time. It shows a company's ability to generate revenue and manage its expenses, and is used to assess the company's financial performance and profitability.
A profit and loss statement typically includes the following information:
Revenues: The total amount of money that the company has earned from its business activities
Cost of goods sold (COGS): The direct costs associated with the production of the company's goods or services
Gross profit: The difference between revenues and COGS
Operating expenses: The expenses that a company incurs in the course of its normal business operations, such as salaries and wages, rent, and utilities
Operating income: The difference between gross profit and operating expenses
Non-operating expenses: Expenses that are not directly related to the company's core business operations, such as interest expense and loss on the sale of assets
Income before taxes: The difference between operating income and non-operating expenses
Income tax expense: The amount of money that the company owes in taxes
Net income: The final profit or loss of the company, after all revenues, expenses, and taxes have been considered
