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A profit and loss statement (P&L) sets out your company income versus expenses, to help calculate profit. You’ll sometimes see profit and loss statements called an income statement, statement of operations, or statement of earnings.
P&L statements can be created to analyze and compare business performance over a month, a quarter or a year, and are an effective tool to review cash flow and predict future business performance.
Smart business owners use profit and loss statements alongside other key financial documents, like the balance sheet and cash flow statement, to check up on and improve the health of their businesses.
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Revenue, also called sales or business income, includes money received for the sale of the company’s goods or services.
Expenses, are costs the company incurs related to sales. These might include the cost of goods for resale, property rental, and the price of consumables like printer ink and stamps.
You can calculate your business profit or loss by subtracting the expenses incurred from your revenue. If the number is positive, you have a net profit. If it’s negative, your business has made a loss in that period.
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The single step profit and loss statement formula is:
Total Revenues - Total Expenses = Net Income
A P&L statement compares company revenue against expenses to determine the net income of the business.
Subtract operating expenses from business income to see your net profit or loss. If revenues are higher than total business expenses, you’re making a profit. If your business expenses over the period being examined were higher than your income, the company has made a loss.
This calculation is useful for business owners and investors as it shows the net profitability of a business, and how efficient a company is at generating net income.
Profit and loss statements give a snapshot view of business performance - create a monthly, quarterly or annual statement, which you can analyze and compare to performance over the same period in previous years.
Choose the time period used to generate the income statement - this could be a month, a quarter or a year, for example.
Make sure the P&L statement fits your business by adding and removing line items as you go. Add a line where needed, or you can also easily delete lines from the template as required.
To receive the download link on your email, please enter your email address. When you enter your email, you’ll also be signed up to receive the Wise Business newsletter, our free monthly email packed with handy guides and tips on how to grow your business internationally. You can unsubscribe at any time.
Business email address Business name Role in company Where is your business address? Your business location How many team members do you have? Number of team member Business industry Industry Sign up to our newsletterBy subscribing, you agree to receive marketing communications from Wise. You can unsubscribe at any time using the link in the footer of our emails. See our privacy policy
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