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Profit and Loss Statement

Profit and Loss Statement: Another term for the income statement, which shows a company's revenue, expenses, and profits (or losses) over a specific period of time.

A profit and loss statement, also known as an income statement, is a financial statement that shows a company's revenue, expenses, and profits (or losses) over a specific period of time. The purpose of a profit and loss statement is to provide an overview of a company's financial performance and profitability.

The profit and loss statement typically includes the following information:

  1. Revenue: This section shows the total revenue generated by the company during the period, typically from the sale of goods or services.
  2. Cost of Goods Sold: This section shows the direct costs associated with producing or delivering the goods or services that generated the revenue.
  3. Gross Profit: This section shows the difference between revenues and cost of goods sold, and represents the profit earned from the sale of goods or services before deducting operating expenses.
  4. Operating Expenses: This section shows the costs associated with running the company's day-to-day operations, such as rent, wages, utilities, and supplies.
  5. Operating Income: This section shows the profit earned from the company's operations, after deducting operating expenses.
  6. Non-Operating Income: This section shows any income earned by the company that is not related to its core business operations, such as investment income.
  7. Non-Operating Expenses: This section shows any expenses incurred by the company that are not related to its core business operations, such as interest expenses or losses from the sale of assets.
  8. Net Income: This section shows the profit earned by the company after deducting all expenses and taxes.

Overall, the profit and loss statement is an important tool for assessing a company's financial performance and profitability. By carefully analyzing the information presented on the statement, investors, creditors, and other stakeholders can make informed decisions about investing, lending, or partnering with a company.