| Revenue | |
| Total Revenue | $0 |
| Cost of Goods Sold (COGS) | |
| Total COGS | $0 |
| Gross Profit | $0 |
| Operating Expenses (OpEx) | |
| Total OpEx | $0 |
| EBITDA | $0 |
| Below EBITDA | |
| Net Profit / (Loss) | $0 |
How to build a profit and loss (P&L) statement
A P&L statement (income statement) shows revenue, costs and profit for a period. It answers whether the business made money and where it went. Build it monthly to spot trends early.
Formula
Gross profit = Revenue - Cost of goods sold (COGS) Operating profit (EBIT) = Gross profit - Operating expenses Net profit = Operating profit - Interest - Taxes
Example
Revenue $40,000, COGS $15,000: gross profit $25,000 (62.5%). Operating expenses $18,000: operating profit $7,000. After $1,500 of tax, net profit is $5,500 (13.75% net margin).
Frequently asked questions
What is the difference between a P&L and a cash flow statement?
The P&L shows profitability when revenue is earned and costs are incurred; the cash flow statement shows when cash actually moves. A profitable business can still run out of cash.
What goes into COGS?
Direct costs of delivering your product or service: materials, production, direct labor, hosting for SaaS, and payment processing tied to sales.
How often should I prepare a P&L?
Monthly for management decisions, quarterly for investors and lenders, and annually for taxes.