What is a profit and loss statement template?
A profit and loss statement (P&L) is a record that measures and shows all the revenue and expenses a company incurred during a specific period of time. A profit and loss Excel template makes it easy to create a P&L with your own company’s financial information.
This document helps determine a company’s financial health and the financial progress it made during a particular period. It 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.
What is a profit and loss statement used for?
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.
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