P&L
Back to GlossaryDefinition
A financial statement that summarizes revenues, costs, and expenses in a given time period.
Summary
P&L stands for Profit and Loss statement, which is a fundamental financial document that summarizes a company's revenues, costs, and expenses during a specific period (usually quarterly or annually). It shows whether a business made money (profit) or lost money (loss) over that time frame. Also known as an income statement, it's one of the three core financial statements alongside the balance sheet and cash flow statement.
Usage Context
Understanding P&L is crucial when analyzing business performance, making investment decisions, evaluating company health, preparing budgets, and communicating financial results to stakeholders.
Common Confusions
- Confusing P&L with cash flow - P&L shows profitability, not cash position
- Thinking P&L and income statement are different documents
- Mixing up gross profit, operating profit, and net profit on the P&L
- Confusing P&L timing with balance sheet - P&L covers a period, balance sheet is a snapshot
