The profit and loss statement is a financial statement that summarizes the revenues, expenses, and profits or losses of a business. This report portrays the financial results of a business for a specific period of time, such as for a month, quarter, or year.
The profit and loss statement is crucial to the business, for it reveals the ability of the business to generate a profit. As such, it is used to plan for the revenue improvement and cost reductions needed to improve profitability.
The financial statements are also comprised of the balance sheet and the statement of cash flows. At a minimum, one should review the profit and loss statement alongside the balance sheet, to gain a clear view of both the financial results and financial position of a business.
The profit and loss statement is also known as the P&L, P&L statement, profit statement, or income statement.
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