A profit and loss statement (P&L) template can be used to create a record that measures and shows all the revenue and expenses a company incurred during a specific period of time.
Yes, a profit/loss statement, otherwise known as an income statement, is one of three main financial statements used to determine a business’ financial health. Our profit and loss template makes it easy to create a P&L with your own company’s financial information.
The profit and loss template contains sections for revenue and expenses, which include net sales, gross profit, cost of goods sold, selling expenses, general and administrative expenses, and net profit.
This statement should be prepared and reviewed monthly to evaluate performance and make adjustments as needed to stay on track with financial budgets and goals.
A profit and loss statement is used both internally and externally for different purposes. Internally, it can be viewed at the corporate level, department level, product level or even customer level.
By evaluating the P&L statement at each level, the company can gain insightful understanding of how profitable a product, customer relationship or department is and adjust as needed.
This document is considered one of the most important financial statements due to the amount of information that can be pulled out of it.
Externally, a P&L is used by investors, creditors, and stakeholders to understand how the company is making money and how they are allocating the revenue. It acts as the first impression to investors and creditors as a proof of business success or failure.
A profit and loss statement might look complicated at first glance, but it’s simple once you start to break it into its parts. Let’s look at the key components of a P&L statement, what they mean, and what they tell you about the business.
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Revenue is the money you earn from business operations.
You should use your net sales number for this section. Net sales is the money earned after any discounts or returns.
Cost of revenue covers the direct costs of providing your goods or services.
To be considered a cost of revenue, the thing must be used up as part of the fulfillment process. For example, a coffee shop’s cost of revenue would be coffee beans and single-use cups, but not an espresso machine. The beans and single-use cups can only be used once, while the machine can be used until it breaks.
Cost of Revenue often gets referred to by one of two names:
Gross profit is the amount of money you pocket from sales after considering any cost of revenue.
The gross profit formula is:
Gross Profit = Net Sales - Cost of Revenue
Look to this metric to understand how profitable your business operations are and whether they are generating enough money to cover your operating expenses.
Operating expenses are all other business expenses that are associated with your operations. These are costs that aren’t directly related to fulfilling a sale, like rent, salaries, and office supplies.
The net income of a business is how much it earned after all business expenses are considered. It’s often referred to as “the bottom line” because, on a profit and loss statement, it’s quite literally the line at the bottom.
The net income formula is:
Net Income = Total Revenues - Total Expenses
There are two types of profit and loss statements: single-step and multi-step.
A single-step profit and loss statement focuses on simplifying the profit and loss calculation by showing the total revenue and total expenses as single line items. By looking at the profit and loss statement, you can find your net income in a “single step” by subtracting total expenses from total revenue.
A multi-step profit and loss statement breaks up total revenue and total expenses into separate line items. While total revenue and total expenses are still shown on the P&L, there’s also an itemized breakdown of each expense category.
Which profit and loss statement you use depends on what you’re trying to get from the report. If you want to understand your profitability at a glance, you might want to opt for single-step. But to understand what drives your profitability, you should try a multi-step statement.
Our profit and loss template defaults to a multi-step profit and loss statement.
There are two main sections to a profit and loss statement: revenue and expenses
The profit and loss formula is finding the difference between the two. Written out, it looks like this:
Net Income = Total Revenue - Total Expenses
Total revenue includes what you’ve earned from sales or other parts of your business operations.
Total expenses include both cash and non-cash expenses tied to your operations. For example, you would include the depreciation of any capital assets you have on your balance sheet.
By subtracting total expenses from total revenue, you’re left with the profit (or loss) for that time period. This is also called the “net income.”
Here’s how to do a profit and loss statement in Excel:
Step 1: Download the P&L Excel template.
Step 2: Determine the reporting period (monthly, quarterly, yearly).
Step 3: Export the trial balance from your accounting system for the specified time period.
Step 4: Copy exported trial balance into the “Trial Balance” tab.
Step 5: Calculate net income.
You can find more detailed instructions on how to use our profit/loss statement template upon download. If you're uncertain about financial reporting or have complex accounting needs, consulting with a qualified accountant or financial professional is recommended.
Yes, download our profit and loss statement Excel template. Then in Google Sheets, follow these steps:
The purpose of a profit/loss statement template is to provide a standardized format for summarizing the revenues, costs, and expenses incurred by a business during a given period. The P&L statement template aids in assessing financial performance and supporting decision making.
P&L statement templates are typically prepared on a monthly, quarterly, or yearly basis. How often you prepare one should reflect how actively you are tracking your profits.
If you’re making changes in hopes of improving profits, you’ll likely want to generate profit and loss statements at a higher frequency.
The purpose of a profit/loss statement template is to provide a standardized format for summarizing the revenues, costs, and expenses incurred by a business during a given period. The P&L statement template aids in assessing financial performance and supporting decision making.
P&L statement templates can vary depending on industry, company size, and accounting practices. A typical profit and loss statement template will include the following information:
Yes, download our profit and loss statement Excel template. Then in Google Sheets, follow these steps:
The only difference between a profit and loss statement and an income statement is the name. These terms can be used interchangeably for the same document.
Profit and loss statements and balance sheets are both essential financial statements, but highlight different aspects of your business.
Profit and loss statements are used to show how profitable a business is over a period of time. You can look at a month, quarter, year, or completely custom period of time to understand whether the business made or lost money.
Balance sheets show a business’s assets, liabilities, and equity at a certain point of time. It acts like a snapshot of that moment as opposed to over a period of time.
At year-end, you may look at your balance sheet and profit and loss statement. The profit and loss statement would contain all the activity from January 1st to December 31st. But your balance sheet will show the balances of your assets and liabilities on December 31st.