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1. Shard Calculation

Query:

Response:

Calculated Shard: 68 (from laksa132)

2. Crawled Status Check

Query:

curl -X POST \
  'http://laksa068.int.ahrefs:8124/' \
  -H 'Content-Type: text/plain' \
  -H 'X-ClickHouse-Database: crawler3' \
  -H 'Authorization: Basic YXBpOg==' \
  -d 'SELECT getAhrefsURLFromUnparsed(src_unparsed) AS found_url, ifNull(toUnixTimestamp(download_stamp), 0) AS crawl_time, ifNull(toUnixTimestamp(props_url_first_seen), 0) AS first_indexed_time, download_http_code AS http_code, src_unparsed AS src_unparsed, src_root_hash AS src_root_hash, history_drop_reason AS history_drop_reason, meta_title AS meta_title, meta_descriptions AS meta_descriptions, attrs_boilerpipe_text AS attrs_boilerpipe_text, attrs_markdown AS attrs_markdown, attrs_readable_markdown AS attrs_readable_markdown, meta_canonical AS meta_canonical FROM crawler3.page_info_local FINAL PREWHERE (src_root_hash, src_unparsed) IN ((getAhrefsRootHashFromUnparsed(getAhrefsUnparsedNoserviceFromURL(\'https://corporatefinanceinstitute.com/resources/accounting/profit-and-loss-statement-pl/\')), getAhrefsUnparsedNoserviceFromURL(\'https://corporatefinanceinstitute.com/resources/accounting/profit-and-loss-statement-pl/\'))) FORMAT JSONEachRow'

Response:

{"found_url":"https:\/\/corporatefinanceinstitute.com\/resources\/accounting\/profit-and-loss-statement-pl\/","crawl_time":1776310080,"first_indexed_time":1667284805,"http_code":200,"src_unparsed":"com,corporatefinanceinstitute!\/resources\/accounting\/profit-and-loss-statement-pl\/ s443","src_root_hash":"407738686562150068","history_drop_reason":null,"meta_title":"Profit and Loss Statement (P&L)","meta_descriptions":["A profit and loss statement (P&L), or income statement or statement of operations, is a financial report that provides a summary of a"],"attrs_boilerpipe_text":"A summary of income and expenditures for a business\nPublished\nSeptember 1, 2019\nRead Time\n4\n                                                      minutes\nOver 3 million + professionals use CFI to learn accounting, financial analysis, modeling and more. Unlock the essentials of corporate finance with our free resources and get an exclusive sneak peek at the first module of each course.\nStart Free\nWhat is the Profit and Loss Statement (P&L)?\nA profit and loss statement (P&L), or income statement or statement of operations, is a financial report that provides a summary of a company’s revenues, expenses, and profits\/losses over a given period of time. The P&L statement shows a company’s ability to generate sales, manage expenses, and create profits. It is prepared based on accounting principles that include revenue recognition, matching, and accruals, which makes it different from the cash flow statement.\nImage: CFI’s\nFinancial Analysis Fundamentals\n.\nStructure of the Profit and Loss Statement\nA company’s statement of profit and loss is portrayed over a period of time, typically a month, quarter, or fiscal year.\nThe main categories that can be found on the P&L include:\nRevenue (or Sales)\nCost of Goods Sold (or Cost of Sales)\nSelling, General & Administrative (SG&A) Expenses\nMarketing and Advertising\nTechnology\n\/Research & Development\nInterest Expense\nTaxes\nNet Income\nExample Profit and Loss Statement (P&L)\nBelow is an example of Amazon’s 2015-2017 P&L statement, which they call the Consolidated Statement of Operations. To learn how to analyze these financial statements, check out CFI’s\nAdvanced Financial Modeling Course on Amazon\n.\nSource: amazon.com\nImage: CFI’s\nAmazon Financial Analysis Course\n.\nLooking at the above example, we see that Amazon posted a profit of $596 million in 2015, a profit of $2.4 billion in 2016, and a profit of $3.0 billion in 2017.\nAmazon breaks down its total revenue into product sales and service sales. Its operating expenses consist of cost of sales, fulfillment, marketing, technology, G&A, and others. At this point, it provides a subtotal on the statement for Operating Income, also commonly referred to as Earnings Before Interest and Taxes (EBIT).\nBelow that, interest expense and taxes are deducted to finally arrive at the net profit or loss for the period. To learn more, read Amazon’s \nannual report\n.\nDownload the Profit and Loss Template\nDownload the free Excel template now to advance your knowledge of financial modeling.\nIncome Accounts vs Expenditure Accounts\nThere are two main categories of accounts for accountants to use when preparing a profit and loss statement.\nThe table below summarizes these two accounts: income and expenditures.\nIncome\nExpenditure\nRevenue\nCost of Goods Sold\nSales\nMarketing and Advertising\nInterest Income\nSelling, General & Administrative\nGains\nSalaries, Benefits & Wages\nFees Charged\nInterest Expense\nCommissions Earned\nInsurance\nRental Income\nTelecommunication\nProfessional Fees\nTaxes\nImpact of Accounting Principles on the P&L Statement\nIt might not seem obvious by looking at a profit and loss statement, but the final figure at the bottom (i.e., the total profit or the total loss) may be very different from the actual amount of cash that’s made or lost.\nThe main factors that create a difference between profit and cash generation are:\nRevenue recognition principle – revenue is often recognized before cash is received (which creates accounts receivable on the balance sheet)\nMatching principle – expenses are matched to revenues during the period(s) those revenues are earned\nAccrual principle\n– income and expenditures should be recorded during the periods they occur, not when cash is received, which can make revenue and expenses materially different from cash flow\nBeyond the Profit and Loss Statement\nAnalysts must go beyond the profit and loss statement to get a full picture of a company’s financial health. To properly assess a business, it’s critical to also look at the balance sheet and the cash flow statement.\n1. Analyzing the Balance Sheet\nThe balance sheet shows a company’s assets, liabilities, and equity at a specific point in time. This snapshot of the company’s financial position is important for assessing:\nThe company’s asset base – ability to generate future revenues\nLiabilities – future obligations the company has to meet\nWorking capital – the company’s short-term liquidity position\nCapital structure – how a company is financed between debt and equity\n2. Analyzing the Cash Flow Statement\nThe statement of cash flow shows how much cash a company generated and consumed over a period of time.  It consists of three parts: cash from operations, cash used in investing, and cash from financing. This statement is important for assessing:\nThe company’s ability to generate cash from operations\nFree Cash Flow\ngeneration\nHow much money has been raised (debt and or equity)\nThe net change in cash position over the period\nThe start and end of period cash balance\nHow to Analyze a Profit and Loss Statement (P&L)\nOne of the main jobs of a professional financial analyst is to analyze the P&L of a company in order to make recommendations about the financial strength of the company, attractiveness of investing in it, or acquiring the entire business.\nExamples of P&L statement analysis include:\nComparing year-over-year numbers (horizontal analysis) as well as industry benchmarking\nLooking at margins: gross profit margin, EBITDA margin, operating margin, net profit margin\nTrend analysis: are metrics improving or deteriorating\nRates of return: return on equity (ROE), return on assets (ROA)\nValuation metrics: EV\/EBITDA, P\/E ratio, Price to Book, etc\nConnect what you just learned to a clear career path with CFI’s role‑based courses and certification programs.\nAdditional Resources\nThank you for reading CFI’s guide to understanding the profit and loss statement. CFI is on a mission to help you advance your career. With that goal in mind, these additional CFI resources will be very helpful:\nFree Reading Financial Statements Course\nProfit and Loss Template\nIncome Statement Template\nProfit and Loss (P&L) Statement Template\nFinancial Modeling Guide\nSee all Accounting resources\nSee all Capital Markets resources","attrs_markdown":"[Corporate Finance Institute](https:\/\/corporatefinanceinstitute.com\/)\n\nMenu\n\n- [Certifications](https:\/\/corporatefinanceinstitute.com\/certifications\/)\n- [Courses](https:\/\/corporatefinanceinstitute.com\/collections\/)\n- [Resources](https:\/\/corporatefinanceinstitute.com\/resources\/)\n- [About](https:\/\/corporatefinanceinstitute.com\/about-cfi\/)\n- [Pricing](https:\/\/corporatefinanceinstitute.com\/pricing\/)\n- [Teams](https:\/\/corporatefinanceinstitute.com\/cfi-for-teams\/)\n\n[My Dashboard](https:\/\/learn.corporatefinanceinstitute.com\/dashboard)\n\n[Log In](https:\/\/learn.corporatefinanceinstitute.com\/auth\/login)\n\n[Start Free](https:\/\/learn.corporatefinanceinstitute.com\/auth\/registration)\n\n- [Certifications](https:\/\/corporatefinanceinstitute.com\/certifications\/)\n- [Courses](https:\/\/corporatefinanceinstitute.com\/collections\/)\n- [About CFI](https:\/\/corporatefinanceinstitute.com\/about-cfi\/)\n- [Pricing](https:\/\/corporatefinanceinstitute.com\/pricing\/)\n- [CFI For Teams](https:\/\/corporatefinanceinstitute.com\/cfi-for-teams\/)\n- [Resources](https:\/\/corporatefinanceinstitute.com\/resources\/)\n\n[My Dashboard](https:\/\/learn.corporatefinanceinstitute.com\/dashboard)\n\n[Log In](https:\/\/learn.corporatefinanceinstitute.com\/auth\/login)\n\n[Start Free](https:\/\/learn.corporatefinanceinstitute.com\/auth\/registration)\n\n[Home](https:\/\/corporatefinanceinstitute.com\/ \"Go to Corporate Finance Institute.\")\n\n›\n\n[Resources](https:\/\/corporatefinanceinstitute.com\/resources\/ \"Go to Resources.\")\n\n›\n\n[Accounting](https:\/\/corporatefinanceinstitute.com\/topic\/accounting\/ \"Go to the Accounting Resource Type archives.\")\n\n›\n\nProfit and Loss Statement (P\\&L)\n\nTable of Contents\n\n- [What is the Profit and Loss Statement (P\\&L)?](https:\/\/corporatefinanceinstitute.com\/resources\/accounting\/profit-and-loss-statement-pl\/#what-is-the-profit-and-loss-statement-pl)\n- [Structure of the Profit and Loss Statement](https:\/\/corporatefinanceinstitute.com\/resources\/accounting\/profit-and-loss-statement-pl\/#structure-of-the-profit-and-loss-statement)\n- [Example Profit and Loss Statement (P\\&L)](https:\/\/corporatefinanceinstitute.com\/resources\/accounting\/profit-and-loss-statement-pl\/#example-profit-and-loss-statement-pl)\n- [Download the Profit and Loss Template](https:\/\/corporatefinanceinstitute.com\/resources\/accounting\/profit-and-loss-statement-pl\/#download-the-profit-and-loss-template)\n- [Income Accounts vs Expenditure Accounts](https:\/\/corporatefinanceinstitute.com\/resources\/accounting\/profit-and-loss-statement-pl\/#income-accounts-vs-expenditure-accounts)\n- [Impact of Accounting Principles on the P\\&L Statement](https:\/\/corporatefinanceinstitute.com\/resources\/accounting\/profit-and-loss-statement-pl\/#impact-of-accounting-principles-on-the-pl-statement)\n- [Beyond the Profit and Loss Statement](https:\/\/corporatefinanceinstitute.com\/resources\/accounting\/profit-and-loss-statement-pl\/#beyond-the-profit-and-loss-statement)\n  - [1\\. Analyzing the Balance Sheet](https:\/\/corporatefinanceinstitute.com\/resources\/accounting\/profit-and-loss-statement-pl\/#1-analyzing-the-balance-sheet)\n  - [2\\. Analyzing the Cash Flow Statement](https:\/\/corporatefinanceinstitute.com\/resources\/accounting\/profit-and-loss-statement-pl\/#2-analyzing-the-cash-flow-statement)\n- [How to Analyze a Profit and Loss Statement (P\\&L)](https:\/\/corporatefinanceinstitute.com\/resources\/accounting\/profit-and-loss-statement-pl\/#how-to-analyze-a-profit-and-loss-statement-pl)\n- [Additional Resources](https:\/\/corporatefinanceinstitute.com\/resources\/accounting\/profit-and-loss-statement-pl\/#additional-resources)\n\n# Profit and Loss Statement (P\\&L)\nA summary of income and expenditures for a business\n\nWritten by  [Tim Vipond, FMVA](https:\/\/corporatefinanceinstitute.com\/author\/tim-vipond\/)\n\nPublished September 1, 2019\n\nRead Time  4 minutes\n\nOver 3 million + professionals use CFI to learn accounting, financial analysis, modeling and more. Unlock the essentials of corporate finance with our free resources and get an exclusive sneak peek at the first module of each course.    [Start Free](https:\/\/learn.corporatefinanceinstitute.com\/auth\/registration)\n## What is the Profit and Loss Statement (P\\&L)?\nA profit and loss statement (P\\&L), or income statement or statement of operations, is a financial report that provides a summary of a company’s revenues, expenses, and profits\/losses over a given period of time. The P\\&L statement shows a company’s ability to generate sales, manage expenses, and create profits. It is prepared based on accounting principles that include revenue recognition, matching, and accruals, which makes it different from the cash flow statement.\n\n[![Breakdown of Profit and Loss Statement (P\\&L) Statement, including Revenues and Expenses]()](https:\/\/corporatefinanceinstitute.com\/course\/financial-analysis-fundamentals\/)\n\n*Image: CFI’s [Financial Analysis Fundamentals](https:\/\/corporatefinanceinstitute.com\/course\/financial-analysis-fundamentals\/).*\n\n## Structure of the Profit and Loss Statement\nA company’s statement of profit and loss is portrayed over a period of time, typically a month, quarter, or fiscal year.\n\nThe main categories that can be found on the P\\&L include:\n\n- Revenue (or Sales)\n- Cost of Goods Sold (or Cost of Sales)\n- Selling, General & Administrative (SG\\&A) Expenses\n- Marketing and Advertising\n- Technology\/Research & Development\n- Interest Expense\n- Taxes\n- Net Income\n## Example Profit and Loss Statement (P\\&L)\nBelow is an example of Amazon’s 2015-2017 P\\&L statement, which they call the Consolidated Statement of Operations. To learn how to analyze these financial statements, check out CFI’s [Advanced Financial Modeling Course on Amazon](https:\/\/corporatefinanceinstitute.com\/course\/advanced-financial-modeling-valuation-amazon-dcf-new\/).\n\n[![Example of Profit and Loss Statement (P\\&L) from Amazon]()](https:\/\/corporatefinanceinstitute.com\/course\/advanced-financial-modeling-valuation-amazon-dcf-new\/)\n\nSource: amazon.com\n\n*Image: CFI’s [Amazon Financial Analysis Course](https:\/\/corporatefinanceinstitute.com\/course\/advanced-financial-modeling-valuation-amazon-dcf-new\/).*\n\nLooking at the above example, we see that Amazon posted a profit of \\$596 million in 2015, a profit of \\$2.4 billion in 2016, and a profit of \\$3.0 billion in 2017.\n\nAmazon breaks down its total revenue into product sales and service sales. Its operating expenses consist of cost of sales, fulfillment, marketing, technology, G\\&A, and others. At this point, it provides a subtotal on the statement for Operating Income, also commonly referred to as Earnings Before Interest and Taxes (EBIT).\n\nBelow that, interest expense and taxes are deducted to finally arrive at the net profit or loss for the period. To learn more, read Amazon’s [annual report](https:\/\/ir.aboutamazon.com\/annual-reports\/).\n\n## Download the Profit and Loss Template\nDownload the free Excel template now to advance your knowledge of financial modeling.\n\n![Screenshot of Free Profit and Loss P\\&L Excel Template]()\n\n## Income Accounts vs Expenditure Accounts\nThere are two main categories of accounts for accountants to use when preparing a profit and loss statement.\n\nThe table below summarizes these two accounts: income and expenditures.\n\n| Income | Expenditure |\n|---|---|\n| Revenue | Cost of Goods Sold |\n| Sales | Marketing and Advertising |\n| Interest Income | Selling, General & Administrative |\n| Gains | Salaries, Benefits & Wages |\n| Fees Charged | Interest Expense |\n| Commissions Earned | Insurance |\n| Rental Income | Telecommunication |\n|   | Professional Fees |\n|   | Taxes |\n## Impact of Accounting Principles on the P\\&L Statement\nIt might not seem obvious by looking at a profit and loss statement, but the final figure at the bottom (i.e., the total profit or the total loss) may be very different from the actual amount of cash that’s made or lost.\n\nThe main factors that create a difference between profit and cash generation are:\n\n- Revenue recognition principle – revenue is often recognized before cash is received (which creates accounts receivable on the balance sheet)\n- Matching principle – expenses are matched to revenues during the period(s) those revenues are earned\n- [Accrual principle](https:\/\/corporatefinanceinstitute.com\/resources\/accounting\/accrual-principle\/) – income and expenditures should be recorded during the periods they occur, not when cash is received, which can make revenue and expenses materially different from cash flow\n## Beyond the Profit and Loss Statement\nAnalysts must go beyond the profit and loss statement to get a full picture of a company’s financial health. To properly assess a business, it’s critical to also look at the balance sheet and the cash flow statement.\n\n### 1\\. Analyzing the Balance Sheet\nThe balance sheet shows a company’s assets, liabilities, and equity at a specific point in time. This snapshot of the company’s financial position is important for assessing:\n\n- The company’s asset base – ability to generate future revenues\n- Liabilities – future obligations the company has to meet\n- Working capital – the company’s short-term liquidity position\n- Capital structure – how a company is financed between debt and equity\n### 2\\. Analyzing the Cash Flow Statement\nThe statement of cash flow shows how much cash a company generated and consumed over a period of time. It consists of three parts: cash from operations, cash used in investing, and cash from financing. This statement is important for assessing:\n\n- The company’s ability to generate cash from operations\n- [Free Cash Flow](https:\/\/corporatefinanceinstitute.com\/resources\/valuation\/what-is-free-cash-flow-fcf\/) generation\n- How much money has been raised (debt and or equity)\n- The net change in cash position over the period\n- The start and end of period cash balance\n## How to Analyze a Profit and Loss Statement (P\\&L)\nOne of the main jobs of a professional financial analyst is to analyze the P\\&L of a company in order to make recommendations about the financial strength of the company, attractiveness of investing in it, or acquiring the entire business.\n\nExamples of P\\&L statement analysis include:\n\n- Comparing year-over-year numbers (horizontal analysis) as well as industry benchmarking\n- Looking at margins: gross profit margin, EBITDA margin, operating margin, net profit margin\n- Trend analysis: are metrics improving or deteriorating\n- Rates of return: return on equity (ROE), return on assets (ROA)\n- Valuation metrics: EV\/EBITDA, P\/E ratio, Price to Book, etc\n\nConnect what you just learned to a clear career path with CFI’s role‑based courses and certification programs.\n\n[Advance Your Career](https:\/\/corporatefinanceinstitute.com\/pricing\/)\n\n## Additional Resources\nThank you for reading CFI’s guide to understanding the profit and loss statement. CFI is on a mission to help you advance your career. With that goal in mind, these additional CFI resources will be very helpful:\n\n- [Free Reading Financial Statements Course](https:\/\/corporatefinanceinstitute.com\/course\/learn-to-read-financial-statements-free-course\/)\n- [Profit and Loss Template](https:\/\/corporatefinanceinstitute.com\/resources\/financial-modeling\/pl-profit-and-loss-template\/)\n- [Income Statement Template](https:\/\/corporatefinanceinstitute.com\/resources\/financial-modeling\/free-income-statement-template\/)\n- [Profit and Loss (P\\&L) Statement Template](https:\/\/corporatefinanceinstitute.com\/resources\/financial-modeling\/profit-and-loss-pl-statement-template\/)\n- [Financial Modeling Guide](https:\/\/corporatefinanceinstitute.com\/resources\/financial-modeling\/free-financial-modeling-guide\/)\n\n**[See all Accounting resources](https:\/\/corporatefinanceinstitute.com\/topic\/accounting\/)**\n\n**[See all Capital Markets resources](https:\/\/corporatefinanceinstitute.com\/topic\/capital-markets\/)**\n\nGet Certified for Financial Modeling (FMVA)®\n\nGain in-demand industry knowledge and hands-on practice that will help you stand out from the competition and become a world-class financial analyst.\n\n[Learn More](https:\/\/corporatefinanceinstitute.com\/certifications\/financial-modeling-valuation-analyst-fmva-program\/)\n\n- Share this article\n- [![Share on LinkedIn]()](http:\/\/www.linkedin.com\/shareArticle?mini=true&url=https%3A%2F%2Fcorporatefinanceinstitute.com%2Fresources%2Faccounting%2Fprofit-and-loss-statement-pl%2F&summary=Profit+and+Loss+Statement+%28P%26L%29 \"Share on LinkedIn\")\n- [![Share on Facebook]()](https:\/\/www.facebook.com\/sharer\/sharer.php?u=https%3A%2F%2Fcorporatefinanceinstitute.com%2Fresources%2Faccounting%2Fprofit-and-loss-statement-pl%2F \"Share on Facebook\")\n- [![Share on Twitter]()](https:\/\/twitter.com\/intent\/tweet?text=Profit+and+Loss+Statement+%28P%26L%29&url=https%3A%2F%2Fcorporatefinanceinstitute.com%2Fresources%2Faccounting%2Fprofit-and-loss-statement-pl%2F \"Share on Twitter\")\n- [![Share on WhatsApp]()](https:\/\/wa.me\/?text=https%3A%2F%2Fcorporatefinanceinstitute.com%2Fresources%2Faccounting%2Fprofit-and-loss-statement-pl%2F&summary=Profit+and+Loss+Statement+%28P%26L%29 \"Share on WhatsApp\")\n- [![Copy link]()](https:\/\/corporatefinanceinstitute.com\/resources\/accounting\/profit-and-loss-statement-pl\/ \"Copy link\")\n\n- [About CFI](https:\/\/corporatefinanceinstitute.com\/about-cfi\/)\n  - 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[Log in](https:\/\/corporatefinanceinstitute.com\/resources\/accounting\/profit-and-loss-statement-pl\/)\n\n×\n\n### Access Exclusive Templates\nGain unlimited access to more than 250 productivity Templates, CFI's full course catalog and accredited Certification Programs, hundreds of resources, expert reviews and support, the chance to work with real-world finance and research tools, and more.\n\n[Discover Full-Immersion Membership](https:\/\/corporatefinanceinstitute.com\/pricing\/)\n\nAlready have a Full-Immersion membership? [Log in](https:\/\/corporatefinanceinstitute.com\/resources\/accounting\/profit-and-loss-statement-pl\/)","attrs_readable_markdown":"A summary of income and expenditures for a business\n\nPublished September 1, 2019\n\nRead Time  4 minutes\n\nOver 3 million + professionals use CFI to learn accounting, financial analysis, modeling and more. Unlock the essentials of corporate finance with our free resources and get an exclusive sneak peek at the first module of each course.    [Start Free](https:\/\/learn.corporatefinanceinstitute.com\/auth\/registration)\n## What is the Profit and Loss Statement (P\\&L)?\nA profit and loss statement (P\\&L), or income statement or statement of operations, is a financial report that provides a summary of a company’s revenues, expenses, and profits\/losses over a given period of time. The P\\&L statement shows a company’s ability to generate sales, manage expenses, and create profits. It is prepared based on accounting principles that include revenue recognition, matching, and accruals, which makes it different from the cash flow statement.\n\n[![Breakdown of Profit and Loss Statement (P\\&L) Statement, including Revenues and Expenses](https:\/\/cdn.corporatefinanceinstitute.com\/assets\/profit-loss-p-and-l.png)](https:\/\/corporatefinanceinstitute.com\/course\/financial-analysis-fundamentals\/)\n\n*Image: CFI’s [Financial Analysis Fundamentals](https:\/\/corporatefinanceinstitute.com\/course\/financial-analysis-fundamentals\/).*\n\n## Structure of the Profit and Loss Statement\nA company’s statement of profit and loss is portrayed over a period of time, typically a month, quarter, or fiscal year.\n\nThe main categories that can be found on the P\\&L include:\n\n- Revenue (or Sales)\n- Cost of Goods Sold (or Cost of Sales)\n- Selling, General & Administrative (SG\\&A) Expenses\n- Marketing and Advertising\n- Technology\/Research & Development\n- Interest Expense\n- Taxes\n- Net Income\n## Example Profit and Loss Statement (P\\&L)\nBelow is an example of Amazon’s 2015-2017 P\\&L statement, which they call the Consolidated Statement of Operations. To learn how to analyze these financial statements, check out CFI’s [Advanced Financial Modeling Course on Amazon](https:\/\/corporatefinanceinstitute.com\/course\/advanced-financial-modeling-valuation-amazon-dcf-new\/).\n\n[![Example of Profit and Loss Statement (P\\&L) from Amazon](https:\/\/cdn.corporatefinanceinstitute.com\/assets\/amazon-profit-and-loss-pl.png)](https:\/\/corporatefinanceinstitute.com\/course\/advanced-financial-modeling-valuation-amazon-dcf-new\/)\n\nSource: amazon.com\n\n*Image: CFI’s [Amazon Financial Analysis Course](https:\/\/corporatefinanceinstitute.com\/course\/advanced-financial-modeling-valuation-amazon-dcf-new\/).*\n\nLooking at the above example, we see that Amazon posted a profit of \\$596 million in 2015, a profit of \\$2.4 billion in 2016, and a profit of \\$3.0 billion in 2017.\n\nAmazon breaks down its total revenue into product sales and service sales. Its operating expenses consist of cost of sales, fulfillment, marketing, technology, G\\&A, and others. At this point, it provides a subtotal on the statement for Operating Income, also commonly referred to as Earnings Before Interest and Taxes (EBIT).\n\nBelow that, interest expense and taxes are deducted to finally arrive at the net profit or loss for the period. To learn more, read Amazon’s [annual report](https:\/\/ir.aboutamazon.com\/annual-reports\/).\n\n## Download the Profit and Loss Template\nDownload the free Excel template now to advance your knowledge of financial modeling.\n\n![Screenshot of Free Profit and Loss P\\&L Excel Template](https:\/\/cdn.corporatefinanceinstitute.com\/assets\/pl-template-blank.png)\n\n## Income Accounts vs Expenditure Accounts\nThere are two main categories of accounts for accountants to use when preparing a profit and loss statement.\n\nThe table below summarizes these two accounts: income and expenditures.\n\n| Income | Expenditure |\n|---|---|\n| Revenue | Cost of Goods Sold |\n| Sales | Marketing and Advertising |\n| Interest Income | Selling, General & Administrative |\n| Gains | Salaries, Benefits & Wages |\n| Fees Charged | Interest Expense |\n| Commissions Earned | Insurance |\n| Rental Income | Telecommunication |\n|   | Professional Fees |\n|   | Taxes |\n## Impact of Accounting Principles on the P\\&L Statement\nIt might not seem obvious by looking at a profit and loss statement, but the final figure at the bottom (i.e., the total profit or the total loss) may be very different from the actual amount of cash that’s made or lost.\n\nThe main factors that create a difference between profit and cash generation are:\n\n- Revenue recognition principle – revenue is often recognized before cash is received (which creates accounts receivable on the balance sheet)\n- Matching principle – expenses are matched to revenues during the period(s) those revenues are earned\n- [Accrual principle](https:\/\/corporatefinanceinstitute.com\/resources\/accounting\/accrual-principle\/) – income and expenditures should be recorded during the periods they occur, not when cash is received, which can make revenue and expenses materially different from cash flow\n## Beyond the Profit and Loss Statement\nAnalysts must go beyond the profit and loss statement to get a full picture of a company’s financial health. To properly assess a business, it’s critical to also look at the balance sheet and the cash flow statement.\n\n### 1\\. Analyzing the Balance Sheet\nThe balance sheet shows a company’s assets, liabilities, and equity at a specific point in time. This snapshot of the company’s financial position is important for assessing:\n\n- The company’s asset base – ability to generate future revenues\n- Liabilities – future obligations the company has to meet\n- Working capital – the company’s short-term liquidity position\n- Capital structure – how a company is financed between debt and equity\n### 2\\. Analyzing the Cash Flow Statement\nThe statement of cash flow shows how much cash a company generated and consumed over a period of time. It consists of three parts: cash from operations, cash used in investing, and cash from financing. This statement is important for assessing:\n\n- The company’s ability to generate cash from operations\n- [Free Cash Flow](https:\/\/corporatefinanceinstitute.com\/resources\/valuation\/what-is-free-cash-flow-fcf\/) generation\n- How much money has been raised (debt and or equity)\n- The net change in cash position over the period\n- The start and end of period cash balance\n## How to Analyze a Profit and Loss Statement (P\\&L)\nOne of the main jobs of a professional financial analyst is to analyze the P\\&L of a company in order to make recommendations about the financial strength of the company, attractiveness of investing in it, or acquiring the entire business.\n\nExamples of P\\&L statement analysis include:\n\n- Comparing year-over-year numbers (horizontal analysis) as well as industry benchmarking\n- Looking at margins: gross profit margin, EBITDA margin, operating margin, net profit margin\n- Trend analysis: are metrics improving or deteriorating\n- Rates of return: return on equity (ROE), return on assets (ROA)\n- Valuation metrics: EV\/EBITDA, P\/E ratio, Price to Book, etc\n\nConnect what you just learned to a clear career path with CFI’s role‑based courses and certification programs.\n\n## Additional Resources\nThank you for reading CFI’s guide to understanding the profit and loss statement. CFI is on a mission to help you advance your career. With that goal in mind, these additional CFI resources will be very helpful:\n\n- [Free Reading Financial Statements Course](https:\/\/corporatefinanceinstitute.com\/course\/learn-to-read-financial-statements-free-course\/)\n- [Profit and Loss Template](https:\/\/corporatefinanceinstitute.com\/resources\/financial-modeling\/pl-profit-and-loss-template\/)\n- [Income Statement Template](https:\/\/corporatefinanceinstitute.com\/resources\/financial-modeling\/free-income-statement-template\/)\n- [Profit and Loss (P\\&L) Statement Template](https:\/\/corporatefinanceinstitute.com\/resources\/financial-modeling\/profit-and-loss-pl-statement-template\/)\n- [Financial Modeling Guide](https:\/\/corporatefinanceinstitute.com\/resources\/financial-modeling\/free-financial-modeling-guide\/)\n\n**[See all Accounting resources](https:\/\/corporatefinanceinstitute.com\/topic\/accounting\/)**\n\n**[See all Capital Markets resources](https:\/\/corporatefinanceinstitute.com\/topic\/capital-markets\/)**","meta_canonical":null}

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Boilerpipe Text	A summary of income and expenditures for a business Published September 1, 2019 Read Time 4 minutes Over 3 million + professionals use CFI to learn accounting, financial analysis, modeling and more. Unlock the essentials of corporate finance with our free resources and get an exclusive sneak peek at the first module of each course. Start Free What is the Profit and Loss Statement (P&L)? A profit and loss statement (P&L), or income statement or statement of operations, is a financial report that provides a summary of a company’s revenues, expenses, and profits/losses over a given period of time. The P&L statement shows a company’s ability to generate sales, manage expenses, and create profits. It is prepared based on accounting principles that include revenue recognition, matching, and accruals, which makes it different from the cash flow statement. Image: CFI’s Financial Analysis Fundamentals . Structure of the Profit and Loss Statement A company’s statement of profit and loss is portrayed over a period of time, typically a month, quarter, or fiscal year. The main categories that can be found on the P&L include: Revenue (or Sales) Cost of Goods Sold (or Cost of Sales) Selling, General & Administrative (SG&A) Expenses Marketing and Advertising Technology /Research & Development Interest Expense Taxes Net Income Example Profit and Loss Statement (P&L) Below is an example of Amazon’s 2015-2017 P&L statement, which they call the Consolidated Statement of Operations. To learn how to analyze these financial statements, check out CFI’s Advanced Financial Modeling Course on Amazon . Source: amazon.com Image: CFI’s Amazon Financial Analysis Course . Looking at the above example, we see that Amazon posted a profit of $596 million in 2015, a profit of $2.4 billion in 2016, and a profit of $3.0 billion in 2017. Amazon breaks down its total revenue into product sales and service sales. Its operating expenses consist of cost of sales, fulfillment, marketing, technology, G&A, and others. At this point, it provides a subtotal on the statement for Operating Income, also commonly referred to as Earnings Before Interest and Taxes (EBIT). Below that, interest expense and taxes are deducted to finally arrive at the net profit or loss for the period. To learn more, read Amazon’s annual report . Download the Profit and Loss Template Download the free Excel template now to advance your knowledge of financial modeling. Income Accounts vs Expenditure Accounts There are two main categories of accounts for accountants to use when preparing a profit and loss statement. The table below summarizes these two accounts: income and expenditures. Income Expenditure Revenue Cost of Goods Sold Sales Marketing and Advertising Interest Income Selling, General & Administrative Gains Salaries, Benefits & Wages Fees Charged Interest Expense Commissions Earned Insurance Rental Income Telecommunication Professional Fees Taxes Impact of Accounting Principles on the P&L Statement It might not seem obvious by looking at a profit and loss statement, but the final figure at the bottom (i.e., the total profit or the total loss) may be very different from the actual amount of cash that’s made or lost. The main factors that create a difference between profit and cash generation are: Revenue recognition principle – revenue is often recognized before cash is received (which creates accounts receivable on the balance sheet) Matching principle – expenses are matched to revenues during the period(s) those revenues are earned Accrual principle – income and expenditures should be recorded during the periods they occur, not when cash is received, which can make revenue and expenses materially different from cash flow Beyond the Profit and Loss Statement Analysts must go beyond the profit and loss statement to get a full picture of a company’s financial health. To properly assess a business, it’s critical to also look at the balance sheet and the cash flow statement. 1. Analyzing the Balance Sheet The balance sheet shows a company’s assets, liabilities, and equity at a specific point in time. This snapshot of the company’s financial position is important for assessing: The company’s asset base – ability to generate future revenues Liabilities – future obligations the company has to meet Working capital – the company’s short-term liquidity position Capital structure – how a company is financed between debt and equity 2. Analyzing the Cash Flow Statement The statement of cash flow shows how much cash a company generated and consumed over a period of time. It consists of three parts: cash from operations, cash used in investing, and cash from financing. This statement is important for assessing: The company’s ability to generate cash from operations Free Cash Flow generation How much money has been raised (debt and or equity) The net change in cash position over the period The start and end of period cash balance How to Analyze a Profit and Loss Statement (P&L) One of the main jobs of a professional financial analyst is to analyze the P&L of a company in order to make recommendations about the financial strength of the company, attractiveness of investing in it, or acquiring the entire business. Examples of P&L statement analysis include: Comparing year-over-year numbers (horizontal analysis) as well as industry benchmarking Looking at margins: gross profit margin, EBITDA margin, operating margin, net profit margin Trend analysis: are metrics improving or deteriorating Rates of return: return on equity (ROE), return on assets (ROA) Valuation metrics: EV/EBITDA, P/E ratio, Price to Book, etc Connect what you just learned to a clear career path with CFI’s role‑based courses and certification programs. Additional Resources Thank you for reading CFI’s guide to understanding the profit and loss statement. CFI is on a mission to help you advance your career. With that goal in mind, these additional CFI resources will be very helpful: Free Reading Financial Statements Course Profit and Loss Template Income Statement Template Profit and Loss (P&L) Statement Template Financial Modeling Guide See all Accounting resources See all Capital Markets resources
Markdown	[Corporate Finance Institute](https://corporatefinanceinstitute.com/) Menu - [Certifications](https://corporatefinanceinstitute.com/certifications/) - [Courses](https://corporatefinanceinstitute.com/collections/) - [Resources](https://corporatefinanceinstitute.com/resources/) - [About](https://corporatefinanceinstitute.com/about-cfi/) - [Pricing](https://corporatefinanceinstitute.com/pricing/) - [Teams](https://corporatefinanceinstitute.com/cfi-for-teams/) [My Dashboard](https://learn.corporatefinanceinstitute.com/dashboard) [Log In](https://learn.corporatefinanceinstitute.com/auth/login) [Start Free](https://learn.corporatefinanceinstitute.com/auth/registration) - [Certifications](https://corporatefinanceinstitute.com/certifications/) - [Courses](https://corporatefinanceinstitute.com/collections/) - [About CFI](https://corporatefinanceinstitute.com/about-cfi/) - [Pricing](https://corporatefinanceinstitute.com/pricing/) - [CFI For Teams](https://corporatefinanceinstitute.com/cfi-for-teams/) - [Resources](https://corporatefinanceinstitute.com/resources/) [My Dashboard](https://learn.corporatefinanceinstitute.com/dashboard) [Log In](https://learn.corporatefinanceinstitute.com/auth/login) [Start Free](https://learn.corporatefinanceinstitute.com/auth/registration) [Home](https://corporatefinanceinstitute.com/ "Go to Corporate Finance Institute.") › [Resources](https://corporatefinanceinstitute.com/resources/ "Go to Resources.") › [Accounting](https://corporatefinanceinstitute.com/topic/accounting/ "Go to the Accounting Resource Type archives.") › Profit and Loss Statement (P\&L) Table of Contents - [What is the Profit and Loss Statement (P\&L)?](https://corporatefinanceinstitute.com/resources/accounting/profit-and-loss-statement-pl/#what-is-the-profit-and-loss-statement-pl) - [Structure of the Profit and Loss Statement](https://corporatefinanceinstitute.com/resources/accounting/profit-and-loss-statement-pl/#structure-of-the-profit-and-loss-statement) - [Example Profit and Loss Statement (P\&L)](https://corporatefinanceinstitute.com/resources/accounting/profit-and-loss-statement-pl/#example-profit-and-loss-statement-pl) - [Download the Profit and Loss Template](https://corporatefinanceinstitute.com/resources/accounting/profit-and-loss-statement-pl/#download-the-profit-and-loss-template) - [Income Accounts vs Expenditure Accounts](https://corporatefinanceinstitute.com/resources/accounting/profit-and-loss-statement-pl/#income-accounts-vs-expenditure-accounts) - [Impact of Accounting Principles on the P\&L Statement](https://corporatefinanceinstitute.com/resources/accounting/profit-and-loss-statement-pl/#impact-of-accounting-principles-on-the-pl-statement) - [Beyond the Profit and Loss Statement](https://corporatefinanceinstitute.com/resources/accounting/profit-and-loss-statement-pl/#beyond-the-profit-and-loss-statement) - [1\. Analyzing the Balance Sheet](https://corporatefinanceinstitute.com/resources/accounting/profit-and-loss-statement-pl/#1-analyzing-the-balance-sheet) - [2\. Analyzing the Cash Flow Statement](https://corporatefinanceinstitute.com/resources/accounting/profit-and-loss-statement-pl/#2-analyzing-the-cash-flow-statement) - [How to Analyze a Profit and Loss Statement (P\&L)](https://corporatefinanceinstitute.com/resources/accounting/profit-and-loss-statement-pl/#how-to-analyze-a-profit-and-loss-statement-pl) - [Additional Resources](https://corporatefinanceinstitute.com/resources/accounting/profit-and-loss-statement-pl/#additional-resources) # Profit and Loss Statement (P\&L) A summary of income and expenditures for a business Written by [Tim Vipond, FMVA](https://corporatefinanceinstitute.com/author/tim-vipond/) Published September 1, 2019 Read Time 4 minutes Over 3 million + professionals use CFI to learn accounting, financial analysis, modeling and more. Unlock the essentials of corporate finance with our free resources and get an exclusive sneak peek at the first module of each course. [Start Free](https://learn.corporatefinanceinstitute.com/auth/registration) ## What is the Profit and Loss Statement (P\&L)? A profit and loss statement (P\&L), or income statement or statement of operations, is a financial report that provides a summary of a company’s revenues, expenses, and profits/losses over a given period of time. The P\&L statement shows a company’s ability to generate sales, manage expenses, and create profits. It is prepared based on accounting principles that include revenue recognition, matching, and accruals, which makes it different from the cash flow statement. [![Breakdown of Profit and Loss Statement (P\&L) Statement, including Revenues and Expenses]()](https://corporatefinanceinstitute.com/course/financial-analysis-fundamentals/) Image: CFI’s [Financial Analysis Fundamentals](https://corporatefinanceinstitute.com/course/financial-analysis-fundamentals/). ## Structure of the Profit and Loss Statement A company’s statement of profit and loss is portrayed over a period of time, typically a month, quarter, or fiscal year. The main categories that can be found on the P\&L include: - Revenue (or Sales) - Cost of Goods Sold (or Cost of Sales) - Selling, General & Administrative (SG\&A) Expenses - Marketing and Advertising - Technology/Research & Development - Interest Expense - Taxes - Net Income ## Example Profit and Loss Statement (P\&L) Below is an example of Amazon’s 2015-2017 P\&L statement, which they call the Consolidated Statement of Operations. To learn how to analyze these financial statements, check out CFI’s [Advanced Financial Modeling Course on Amazon](https://corporatefinanceinstitute.com/course/advanced-financial-modeling-valuation-amazon-dcf-new/). [![Example of Profit and Loss Statement (P\&L) from Amazon]()](https://corporatefinanceinstitute.com/course/advanced-financial-modeling-valuation-amazon-dcf-new/) Source: amazon.com Image: CFI’s [Amazon Financial Analysis Course](https://corporatefinanceinstitute.com/course/advanced-financial-modeling-valuation-amazon-dcf-new/). Looking at the above example, we see that Amazon posted a profit of \$596 million in 2015, a profit of \$2.4 billion in 2016, and a profit of \$3.0 billion in 2017. Amazon breaks down its total revenue into product sales and service sales. Its operating expenses consist of cost of sales, fulfillment, marketing, technology, G\&A, and others. At this point, it provides a subtotal on the statement for Operating Income, also commonly referred to as Earnings Before Interest and Taxes (EBIT). Below that, interest expense and taxes are deducted to finally arrive at the net profit or loss for the period. To learn more, read Amazon’s [annual report](https://ir.aboutamazon.com/annual-reports/). ## Download the Profit and Loss Template Download the free Excel template now to advance your knowledge of financial modeling. ![Screenshot of Free Profit and Loss P\&L Excel Template]() ## Income Accounts vs Expenditure Accounts There are two main categories of accounts for accountants to use when preparing a profit and loss statement. The table below summarizes these two accounts: income and expenditures. \| Income \| Expenditure \| \|---\|---\| \| Revenue \| Cost of Goods Sold \| \| Sales \| Marketing and Advertising \| \| Interest Income \| Selling, General & Administrative \| \| Gains \| Salaries, Benefits & Wages \| \| Fees Charged \| Interest Expense \| \| Commissions Earned \| Insurance \| \| Rental Income \| Telecommunication \| \| \| Professional Fees \| \| \| Taxes \| ## Impact of Accounting Principles on the P\&L Statement It might not seem obvious by looking at a profit and loss statement, but the final figure at the bottom (i.e., the total profit or the total loss) may be very different from the actual amount of cash that’s made or lost. The main factors that create a difference between profit and cash generation are: - Revenue recognition principle – revenue is often recognized before cash is received (which creates accounts receivable on the balance sheet) - Matching principle – expenses are matched to revenues during the period(s) those revenues are earned - [Accrual principle](https://corporatefinanceinstitute.com/resources/accounting/accrual-principle/) – income and expenditures should be recorded during the periods they occur, not when cash is received, which can make revenue and expenses materially different from cash flow ## Beyond the Profit and Loss Statement Analysts must go beyond the profit and loss statement to get a full picture of a company’s financial health. To properly assess a business, it’s critical to also look at the balance sheet and the cash flow statement. ### 1\. Analyzing the Balance Sheet The balance sheet shows a company’s assets, liabilities, and equity at a specific point in time. This snapshot of the company’s financial position is important for assessing: - The company’s asset base – ability to generate future revenues - Liabilities – future obligations the company has to meet - Working capital – the company’s short-term liquidity position - Capital structure – how a company is financed between debt and equity ### 2\. Analyzing the Cash Flow Statement The statement of cash flow shows how much cash a company generated and consumed over a period of time. It consists of three parts: cash from operations, cash used in investing, and cash from financing. This statement is important for assessing: - The company’s ability to generate cash from operations - [Free Cash Flow](https://corporatefinanceinstitute.com/resources/valuation/what-is-free-cash-flow-fcf/) generation - How much money has been raised (debt and or equity) - The net change in cash position over the period - The start and end of period cash balance ## How to Analyze a Profit and Loss Statement (P\&L) One of the main jobs of a professional financial analyst is to analyze the P\&L of a company in order to make recommendations about the financial strength of the company, attractiveness of investing in it, or acquiring the entire business. Examples of P\&L statement analysis include: - Comparing year-over-year numbers (horizontal analysis) as well as industry benchmarking - Looking at margins: gross profit margin, EBITDA margin, operating margin, net profit margin - Trend analysis: are metrics improving or deteriorating - Rates of return: return on equity (ROE), return on assets (ROA) - Valuation metrics: EV/EBITDA, P/E ratio, Price to Book, etc Connect what you just learned to a clear career path with CFI’s role‑based courses and certification programs. [Advance Your Career](https://corporatefinanceinstitute.com/pricing/) ## Additional Resources Thank you for reading CFI’s guide to understanding the profit and loss statement. CFI is on a mission to help you advance your career. With that goal in mind, these additional CFI resources will be very helpful: - [Free Reading Financial Statements Course](https://corporatefinanceinstitute.com/course/learn-to-read-financial-statements-free-course/) - [Profit and Loss Template](https://corporatefinanceinstitute.com/resources/financial-modeling/pl-profit-and-loss-template/) - [Income Statement Template](https://corporatefinanceinstitute.com/resources/financial-modeling/free-income-statement-template/) - [Profit and Loss (P\&L) Statement Template](https://corporatefinanceinstitute.com/resources/financial-modeling/profit-and-loss-pl-statement-template/) - [Financial Modeling Guide](https://corporatefinanceinstitute.com/resources/financial-modeling/free-financial-modeling-guide/) [See all Accounting resources](https://corporatefinanceinstitute.com/topic/accounting/) [See all Capital Markets resources](https://corporatefinanceinstitute.com/topic/capital-markets/) Get Certified for Financial Modeling (FMVA)® Gain in-demand industry knowledge and hands-on practice that will help you stand out from the competition and become a world-class financial analyst. 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Readable Markdown	A summary of income and expenditures for a business Published September 1, 2019 Read Time 4 minutes Over 3 million + professionals use CFI to learn accounting, financial analysis, modeling and more. Unlock the essentials of corporate finance with our free resources and get an exclusive sneak peek at the first module of each course. [Start Free](https://learn.corporatefinanceinstitute.com/auth/registration) ## What is the Profit and Loss Statement (P\&L)? A profit and loss statement (P\&L), or income statement or statement of operations, is a financial report that provides a summary of a company’s revenues, expenses, and profits/losses over a given period of time. The P\&L statement shows a company’s ability to generate sales, manage expenses, and create profits. It is prepared based on accounting principles that include revenue recognition, matching, and accruals, which makes it different from the cash flow statement. [![Breakdown of Profit and Loss Statement (P\&L) Statement, including Revenues and Expenses](https://cdn.corporatefinanceinstitute.com/assets/profit-loss-p-and-l.png)](https://corporatefinanceinstitute.com/course/financial-analysis-fundamentals/) Image: CFI’s [Financial Analysis Fundamentals](https://corporatefinanceinstitute.com/course/financial-analysis-fundamentals/). ## Structure of the Profit and Loss Statement A company’s statement of profit and loss is portrayed over a period of time, typically a month, quarter, or fiscal year. The main categories that can be found on the P\&L include: - Revenue (or Sales) - Cost of Goods Sold (or Cost of Sales) - Selling, General & Administrative (SG\&A) Expenses - Marketing and Advertising - Technology/Research & Development - Interest Expense - Taxes - Net Income ## Example Profit and Loss Statement (P\&L) Below is an example of Amazon’s 2015-2017 P\&L statement, which they call the Consolidated Statement of Operations. To learn how to analyze these financial statements, check out CFI’s [Advanced Financial Modeling Course on Amazon](https://corporatefinanceinstitute.com/course/advanced-financial-modeling-valuation-amazon-dcf-new/). [![Example of Profit and Loss Statement (P\&L) from Amazon](https://cdn.corporatefinanceinstitute.com/assets/amazon-profit-and-loss-pl.png)](https://corporatefinanceinstitute.com/course/advanced-financial-modeling-valuation-amazon-dcf-new/) Source: amazon.com Image: CFI’s [Amazon Financial Analysis Course](https://corporatefinanceinstitute.com/course/advanced-financial-modeling-valuation-amazon-dcf-new/). Looking at the above example, we see that Amazon posted a profit of \$596 million in 2015, a profit of \$2.4 billion in 2016, and a profit of \$3.0 billion in 2017. Amazon breaks down its total revenue into product sales and service sales. Its operating expenses consist of cost of sales, fulfillment, marketing, technology, G\&A, and others. At this point, it provides a subtotal on the statement for Operating Income, also commonly referred to as Earnings Before Interest and Taxes (EBIT). Below that, interest expense and taxes are deducted to finally arrive at the net profit or loss for the period. To learn more, read Amazon’s [annual report](https://ir.aboutamazon.com/annual-reports/). ## Download the Profit and Loss Template Download the free Excel template now to advance your knowledge of financial modeling. ![Screenshot of Free Profit and Loss P\&L Excel Template](https://cdn.corporatefinanceinstitute.com/assets/pl-template-blank.png) ## Income Accounts vs Expenditure Accounts There are two main categories of accounts for accountants to use when preparing a profit and loss statement. The table below summarizes these two accounts: income and expenditures. \| Income \| Expenditure \| \|---\|---\| \| Revenue \| Cost of Goods Sold \| \| Sales \| Marketing and Advertising \| \| Interest Income \| Selling, General & Administrative \| \| Gains \| Salaries, Benefits & Wages \| \| Fees Charged \| Interest Expense \| \| Commissions Earned \| Insurance \| \| Rental Income \| Telecommunication \| \| \| Professional Fees \| \| \| Taxes \| ## Impact of Accounting Principles on the P\&L Statement It might not seem obvious by looking at a profit and loss statement, but the final figure at the bottom (i.e., the total profit or the total loss) may be very different from the actual amount of cash that’s made or lost. The main factors that create a difference between profit and cash generation are: - Revenue recognition principle – revenue is often recognized before cash is received (which creates accounts receivable on the balance sheet) - Matching principle – expenses are matched to revenues during the period(s) those revenues are earned - [Accrual principle](https://corporatefinanceinstitute.com/resources/accounting/accrual-principle/) – income and expenditures should be recorded during the periods they occur, not when cash is received, which can make revenue and expenses materially different from cash flow ## Beyond the Profit and Loss Statement Analysts must go beyond the profit and loss statement to get a full picture of a company’s financial health. To properly assess a business, it’s critical to also look at the balance sheet and the cash flow statement. ### 1\. Analyzing the Balance Sheet The balance sheet shows a company’s assets, liabilities, and equity at a specific point in time. This snapshot of the company’s financial position is important for assessing: - The company’s asset base – ability to generate future revenues - Liabilities – future obligations the company has to meet - Working capital – the company’s short-term liquidity position - Capital structure – how a company is financed between debt and equity ### 2\. Analyzing the Cash Flow Statement The statement of cash flow shows how much cash a company generated and consumed over a period of time. It consists of three parts: cash from operations, cash used in investing, and cash from financing. This statement is important for assessing: - The company’s ability to generate cash from operations - [Free Cash Flow](https://corporatefinanceinstitute.com/resources/valuation/what-is-free-cash-flow-fcf/) generation - How much money has been raised (debt and or equity) - The net change in cash position over the period - The start and end of period cash balance ## How to Analyze a Profit and Loss Statement (P\&L) One of the main jobs of a professional financial analyst is to analyze the P\&L of a company in order to make recommendations about the financial strength of the company, attractiveness of investing in it, or acquiring the entire business. Examples of P\&L statement analysis include: - Comparing year-over-year numbers (horizontal analysis) as well as industry benchmarking - Looking at margins: gross profit margin, EBITDA margin, operating margin, net profit margin - Trend analysis: are metrics improving or deteriorating - Rates of return: return on equity (ROE), return on assets (ROA) - Valuation metrics: EV/EBITDA, P/E ratio, Price to Book, etc Connect what you just learned to a clear career path with CFI’s role‑based courses and certification programs. ## Additional Resources Thank you for reading CFI’s guide to understanding the profit and loss statement. CFI is on a mission to help you advance your career. With that goal in mind, these additional CFI resources will be very helpful: - [Free Reading Financial Statements Course](https://corporatefinanceinstitute.com/course/learn-to-read-financial-statements-free-course/) - [Profit and Loss Template](https://corporatefinanceinstitute.com/resources/financial-modeling/pl-profit-and-loss-template/) - [Income Statement Template](https://corporatefinanceinstitute.com/resources/financial-modeling/free-income-statement-template/) - [Profit and Loss (P\&L) Statement Template](https://corporatefinanceinstitute.com/resources/financial-modeling/profit-and-loss-pl-statement-template/) - [Financial Modeling Guide](https://corporatefinanceinstitute.com/resources/financial-modeling/free-financial-modeling-guide/) [See all Accounting resources](https://corporatefinanceinstitute.com/topic/accounting/) [See all Capital Markets resources](https://corporatefinanceinstitute.com/topic/capital-markets/)
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