← Glossary Business glossary
What is Profit and loss (P&L)?
A summary of what you earned and what you spent over a period, and what was left.
A P&L runs down the page: revenue at the top, cost of goods sold next to give gross profit, then overheads to give net profit at the bottom.
It answers "did this period work?", which is a different question from "how much is in the bank?" A profitable month can still be a month you ran short of cash, because profit and cash are not the same thing.
Read it alongside cash flow, never instead of it.
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