What is a profit and loss statement?

The profit and loss statement, also called the profit and loss statement, is a financial record that describes in detail the net profit of the company - the lower limit - and the expenses for the time of earnings. Usually, these statements are issued quarterly or once for each fiscal year and are commonly shortened and even talk about P&L statements. Profit and loss statements are not only used to help the company's owner to operate a close financial ship, it can also be a necessary tool for investors to get an idea of ​​how well the company is able to minimize its expenses and maximize its profits. If the company has a profit and loss statement that has well for future earnings, investors can find a good reason to jump on board.

For investment or for accounting purposes, profit and loss statements are generally considered to be statements of cash flows and balance sheets. Investors trying to assess the value of society usually look at all three messages because each of them casts light yinand how well the company earns and manages money. Profit and loss reports describe in detail costs and expenses next to earnings. The balance sheets can show how well society is able to balance its assets compared to its obligations. Cash flow statements show where the general influx of money is spent.

Each report can be considered a piece of financial puzzle of the company. Looking at each other, however, can be difficult to get a clear look at the big picture. For example, a profit and loss statement could show strong income, but the cash flow statement and balance sheet show that these earnings are primarily sucked into the debt. A company that seems to be profitable from its profit and loss statement does not necessarily equal a wise investment. On the contrary, the company does not have to earn attractive profits according to the profit and loss statement, but the balance sheet and cash flow reflects the wise use that can create a society for the stronger in the futureíjmy.

profits and loss statements reflect the data recorded for a period of time. This differs from the balance sheet that provides its data at any given moment. As in the balance sheet, cash flow reports tend to measure specific periods over time. This is another reason why it is important to assess all documents against each other. The profit and loss statement allows the investor or accountant to find out how much money has been brought for a certain period of time, while the balance sheets and cash flows help to provide an idea of ​​where these cash flows at any given moment.