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A profit and loss statement is a financial report showing a summary of a company’s revenue, expenses, and profit (or loss) over a certain period. This can be over a month, quarterly, or annually. It gives owners and investors an insight into how a company is operating.
Profit and loss statements are used alongside a company’s balance sheet and cash flow statement.
- A balance sheet lists a company’s assets and liabilities
- A cash flow statement shows the cash coming in and going out of the business
Business owners can use a P&L statement to assess the performance of the business, areas for improvement and strategies for business growth.
All limited companies need to file their statutory accounts (a balance sheet, profit and loss account and a director’s report) with HMRC (HM Revenue & Customs) as part of the financial year end reporting.
What to include on a profit and loss statement
Your total profit or loss is what the business has earned minus the amount spent.
For Gross Profit – deduct expenses from income
For Gross Operating Profit – deduct operating costs from Gross Profit
Net Profit – this is the total revenue minus all costs including expenses, operating costs, interest, and taxes.
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Disclaimer: Information provided by Kidwells Accountancy on our website is for informational purposes only. It is provided in good faith but we make no guarantee of any kind regarding the accuracy, reliability, or completeness of any information on our site. We always recommend businesses seek independent legal and financial advice before working with us or acting on any information on our website.