6.15What is a Profit and Loss Statement?
1What is it?
The P&L statement (income statement) shows revenue, expenses and profit over a period (a quarter or year).
2Why does it exist?
It answers: did the company make money, and how much?
3Diagram
- 1Revenue ₹10,000
- 2− Operating costs ₹7,500
- 3= Operating profit (EBIT) ₹2,500
- 4− Interest ₹200
- 5= Profit before tax ₹2,300
- 6− Tax ₹575
- 7= Net profit ₹1,725
4Quick revision
- Covers a period.
- Revenue → costs → operating profit → interest → tax → net profit.
5Knowledge check
Q1. Revenue ₹500, costs ₹400, interest ₹20, tax ₹20. Net profit?Show answer
₹60.
Q2. Does the P&L show debt levels?Show answer
No, the balance sheet does. P&L shows interest cost.
Q3. Period or date?Show answer
Period.
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