profit and loss

Profit & Loss

Each month, Profit & Loss looks at the changes taking place in the industry - the strategic shifts into new markets and products and the technological advances that are changing the way the FX and derivatives markets function.

Definition of Profit and Loss Statement - P&L.

A financial statement that summarizes the revenues, costs and expenses incurred during a specific period of time - usually a fiscal quarter or year. These records provide information that shows the ability of a company to generate profit by increasing revenue and reducing costs. The P&L statement is also known as a ‘statement of profit and loss’, an ‘income statement’ or an ‘income and expense statement’.

Investopedia explains Profit and Loss Statement - P&L.

The statement of profit and loss follows a general form as seen in this example. It begins with an entry for revenue and subtracts from revenue the costs of running the business, including cost of goods sold, operating expenses, tax expense and interest expense. Many templates can be found online for free, that can be used in creating your profit and loss, or income statement.

           The balance sheet, income statement and statement of cash flows are the most important financial statements produced by a company. While each is important in its own right, they are meant to be analyzed together.

 

Profit & Loss Statement

 

A Profit & Loss Statement P&L measures the activity of a business over a period of time usually a month, a quarter, or a year. This financial report may have several different names, profit & loss, P&L, income statement, statement of revenues and expenses, or even the operating statement. The P&L basically tells you revenue, expenses, profit, and loss. Keep in mind that in almost all circumstances, profit is not the same thing as cash flow.

The basic formula for the profit-and-loss statement is:

Revenues – expenses = net profit.

P&L statements generally follow this format:

Revenues

- Operating variable expenses
= Gross profit operating margin
- Overhead fixed expenses
= Operating income
+/– Other income or expense non-operating
= Pre-tax income
- Income taxes
= Net income after taxes

Definitions of these categories:

Operating, or variable, expenses are the expenses that rise or fall based on your sales volume.

Gross profit margin or operating margin is the amount left when you subtract operating expenses from revenues.

Overhead, or fixed, expenses are costs that don’t vary much month-to-month and don’t rise or fall with the number of sales you make. Examples might include salaries of office staff, rent, or insurance.

Operating income is income after deducting operating and overhead expense.

Other income or expenses non-operating generally don’t relate to the operating side of the business, rather to how the management finances the business. Other income might include interest or dividends from company investments, for example.  Other expenses might include interest paid on loans.

Pre-tax income is income before federal and state governments take their share.

Income taxes How income tax is shown on the P&L varies based on the type of legal entity.  For example, a C corporation almost always shows income tax expense, and sole proprietorship rarely show income tax expense on the P&L.

Net income after taxes is the final amount on most profit-and-loss statements. It represents the net total profit earned by the business during the period, above and beyond all related costs and expenses.

  

Explain Profit and Loss:

 

A profit and loss statement is a financial document that summarizes the revenues, costs and expenses incurred during a specific period of time by a company. The document is used to show managers and investors whether the company made or lost money during the period being reported. It is also known as an 'income statement', a 'statement of profit and loss', or an 'income and expense statement'.

What is Profit and Loss:

	Profit is when you gain usually monetary from an investment. It could be from interest or dividends. Loss is when you lose money from an investment. What Is Profit and Loss Based On:
	Large corporations work hard to make more money in revenues than paid out for expenses. Profit is what is left over after expenses are subtracted from revenues. The mathematical equation

  

What is Realized Profit or Loss:

Profit or loss resulting from the sale or other disposal of a security. Capital gains taxes may be due when profits are realized.

        When operating any kind of business an individual can either get an amount lower than his or her initial investment or an amount that exceeds the original investment. When after subtracting all the business expenses an individual gets an income that exceeds his initial investment that is a profit but if the amount is less than his or her initial investment then that is a loss, because an individual would have lost some amounts during the trading process.

          According to accounting terms, a profit and loss is a statement or financial statement that summarizes the revenues, costs and expenses incurred during a specific period of time. These records provide information that shows the ability of a company to generate profit by increasing revenue and reducing costs. The P&L is also known as a statement of profit and loss.

This is an accounting statement that is able to show all the income and all the expenses that a business has incurred for a period. The difference in the income and the expenses will be shown in the profit and loss account as a surplus or a deficit.