What Is the Profit and Loss Statement (P&L)
A company’s profit and loss statement (P&L) is also known as the income statement. The P&L summarizes the revenues, costs, and expenses incurred during a period, typically a fiscal quarter or year. The P&L is found in the annual financial reports that all publicly traded companies are required by law to issue and distribute to shareholders. Annual financial reports include a company's P&L statement, balance sheet, and a statement of cash flow. Financial statements are found on a company's website.
Key Takeaways:
- A company’s profit and loss (P&L) statement shows the companies revenues, costs, expenses, and net profit for a certain period.
- The P&L statement can be found on a company's website and is one of the financial statements that public companies are required to issue by law to shareholders.
- The P&Ls for different periods should be looked at in conjunction with the cash flow statement for a more accurate picture of a company's financial health.
Understanding Financial Statements
Most companies, both public and privately held, make annual financial reports freely available and distribute them to shareholders, market analysts, portfolio managers, employees, and potential customers, investors, or creditors. The majority of companies use their annual financial reports as a marketing and advertising tool to enhance their corporate image.
In addition to the specific reports required to be included (P&L, balance sheet, cash flow statement), a company usually includes management discussion and analysis. This section is used by company management to present the best possible interpretation of the company's various financial statements and to give the best overall impression of the company's business prospects going forward.
P&L statements serve a variety of purposes for different groups. Management examines the statement attempting to identify ways to reduce costs or otherwise increase profits. Employees' interest in the P&L statement primarily pertains to salary negotiations and concerns about job security. Creditors and investors use the P&L statement to help them evaluate whether to invest capital in the company.
What Is Included in the Profit and Loss Statement (P&L)?
The P&L is typically front and center of any business plan because it shows how much profit or loss was generated by a business. Like the cash flow statement, the P&L shows the changes in the financial accounts over a period. The balance sheet is different because it shows the company's assets and liabilities at a snapshot in time.
The P&L should be looked at in conjunction with the cash flow statement, however, because if the accrual method of accounting is used, revenues and expenses can be logged on the P&L before the cash payments are made.
The general form of the statement is a line item for revenue, known as the top line. Below this, items that compose the cost of doing business are listed and subtracted from the revenue. These items include the cost of goods sold, such as materials and labor; operating expenses; tax expenses; and interest expenses.
To gauge the financial health of a company, analysts will study the P&Ls over more than one period along with other financial indicators.
The difference between the revenue and the costs of doing business is known as the bottom line, ornet income, and represents the company's profit or earnings. For business owners, free templates for creating a personal or business P&L statement can be found online.
Special Considerations for Profit and Loss Statements (P&Ls)
When assessing the financial health of a company, it is important to compare income statements for a company over different accounting periods as the changes in revenues, operating costs, research and development spending, and net earnings over time are more meaningful than the numbers themselves. For example, a company's revenues may grow, but its expenses might grow at a faster rate.
FAQs
The P&L is found in the annual financial reports that all publicly traded companies are required by law to issue and distribute to shareholders. 1 Annual financial reports include a company's P&L statement, balance sheet, and a statement of cash flow. Financial statements are found on a company's website.
Are P&L statements public? ›
Along with the cash flow statement and balance sheet, it is one of the three financial statements that incorporated companies must make public.
How do you find a company's profit and loss account? ›
Add all revenue earned over the accounting period. Add all expenditures made throughout the accounting period. Subtract total expenses from total revenue to know the difference. If the value is positive, it represents profit; if it is negative, it represents a loss.
Can you look up company profits? ›
Financial information can be found on the company's web page in Investor Relations where Securities and Exchange Commission (SEC) and other company reports are often kept. The SEC has financial filings electronically available beginning in 1993/1994 free on their website. See EDGAR: Company Filings.
How do I find a company's P&L? ›
The P&L is found in the annual financial reports that all publicly traded companies are required by law to issue and distribute to shareholders. 1 Annual financial reports include a company's P&L statement, balance sheet, and a statement of cash flow. Financial statements are found on a company's website.
Is P&L confidential? ›
These reports are prepared as frequently as managers need them, usually monthly or quarterly — perhaps even weekly in some businesses. A P&L report goes to the manager in charge of each profit center; these confidential profit reports do not circulate outside the business.
Are profit and loss accounts public? ›
Companies House will do this by removing the option to file 'Abridged' accounts. (Companies House have some further information on the changes and the reasons why on their site here.) This means that your P&L report will be visible to the public.
Where is profit and loss recorded? ›
The profit and loss (P&L) statement is a financial statement that summarizes the revenues, costs, and expenses incurred during a specified period. The P&L statement is one of three financial statements that every public company issues quarterly and annually, along with the balance sheet and the cash flow statement.
Where can I find company financial statements? ›
Company Financial Statements: U.S. Companies
- EDGAR--SEC Website. ...
- Company's Website. ...
- Public Register's Annual Reports. ...
- Yahoo Finance. ...
- Google Finance. ...
- Company Spotlight from Investopedia. ...
- Investor Relations Information Network (IRIN) ...
- The Annual Reports Service.
22.1: How to download P&L statement from Any Other broker ? Login to the broker portal Go to Reports Menu Click on tax P&L Statement option Select for FY 2023-24 period Select futures, options, commodity, currency Download the report in Excel form.
You can ask your accountant to prepare a profit and loss statement for your company or you can build one yourself using the steps below.
What does a P&L sheet look like? ›
A P&L statement shows a company's revenues and expenses related to running the business, such as rent, cost of goods sold, freight, and payroll. Each entry on a P&L statement provides insight into how much money a company made and spent.
How can I find out a company's profit? ›
Profit is revenue minus expenses. For gross profit, you subtract some expenses. For net profit, you subtract all expenses. Gross profits and operating profits are steps on the road to net profits.
Are company profits public knowledge? ›
While many may speculate about the business revenue or look for financial statements of private companies, typically they will find this to be difficult. As the name implies, a private company is not required to disclose financial information to the public.
How do you research a company's profit? ›
Search Company Databases
There are countless websites that collect information on both public and private companies, such as Crunchbase, AngelList, and PitchBook. Sites like these will sometimes give ballpark revenue estimates or at least offer a range, e.g., $1 - 10 million.
Are financial statements available to the public? ›
The U.S. Securities and Exchange Commission (SEC) requires that companies distribute annual reports to their shareholders. Annual Reports are also available freely to the public for most U.S. companies that offer stock.
Is a profit and loss statement a legal document? ›
Public companies produce P&L statements to meet legal reporting requirements and inform investors. The P&L is carefully reviewed by market analysts, investors, and creditors to evaluate a company's revenues, expenses, and profitability.
Are not for profit financial statements public? ›
Nonprofits must allow public inspection of these records during regular business hours at their principal offices. However, many people won't even need to ask -- a number of websites make Forms 990 available for the searching, including the Foundation Center at http://fdncenter.org and GuideStar at www.guidestar.org.
