How Do You Read A Profit & Loss Statement?
A profit and loss statement shows all the expenditures and income for a business during a specified period of time. A profit and loss statement can be confusing to read by someone who’s never seen one before. However, once you understand what the items on the statement mean, it becomes much simpler to read. Look at the section titled Sales. This is the area in which all of a business’s sales are listed. Usually a profit and loss statement will list each specific customer and how much each paid into the business in revenue. Find where it says Operating Expenses. This is the list of expenditures a business had in order to operate the business. This will include wages, products it had to buy in order to conduct business and any shipping expenses. Locate the Net Profit. This is the total amount that the business profited by during the specified period of time. The total profit can be a large amount, if the business performed well during that period. Or it could be a negative number, if it
