What is Profit & Loss Statement?

As per Investopedia; the profit and loss statement (P&L statement) has been defined as a financial statement that summarises the revenues, costs and expenses incurred during a specific period of time - usually a fiscal quarter or year. These records provide information that shows the ability of a company to generate profit by increasing revenue and reducing costs. The P&L statement is also known as a "statement of profit and loss", an "income statement" or an "income and expense statement".

Well above was in terms of global aspects and in Indian terminology the profit and loss statement cycle is taken for the duration 01 Apr to 31 Mar. In a P&L statement; you should be able to see information relating to a company’s revenues, manufacturing costs, sales and general expenses, interest and depreciation charges, tax costs, other income, net profits, and dividends.

Have a look at below image which shows the way the profit and loss statement looks like and you must remember that balance sheet, income statement and statement of cash flows are the most important financial statements produced by a company. While each is important in its own right, they are meant to be analysed together.

Since we deal with stock market tips and thus it is all the more important that we read and analyse all aspects of the company in a holistic way and should learn to read between the lines to see any wrong methodology being adopted by a company to avoid showing the losses.