The profit and loss statement – also known as the P&L- is the overview of all revenues and costs of a certain period. This period mostly covers one year, called fiscal year.
The P&L shows you if a profit or loss has been made over the previous period:
The result is calculated by subtracting the cost from the revenues: Result = Revenues – costs
When reading a P&L, keep in mind that each number in the document is an answer to one of these two questions:
Below we give an overview of the structure of a P&L account. The operating expenses and -income give an overview of all costs and revenues directly related to the operational activities. Operational activities are those activities that are directly involved in creating the good or service that the company is selling. The operating result shows an important part of the result but not the final result. For that, we need also to take into account the financial and exceptional result.