How to Explain a Profit & Loss Sheet

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A profit & loss sheet is a document that outlines income and expenditures of a business. A business might need to explain such a sheet to potential clients, potential investors or those to whom they are applying for grants or loans.

How to Explain a Profit & Loss Sheet

Show the income coming into the business by demonstrating who your major clients are. This is an opportunity to show off the large companies with whom you've been doing business. You can also show how large or small your organization is through your profit list.

Inform your audience where the money is being spent. This shows how frugal you are and how well you make decisions about your business. If you are spending money wisely, your profit & loss sheet will show that, and you will certainly impress potential investors.

Tell your audience how your business is changing. You can compare current profit & loss statements with previous ones to show that you used to do business with certain clients and now your business has changed to a new set of clients.

Follow the math when explaining your statement to show how much profit or loss your company is experiencing. If you are experiencing difficult times, your profit & loss statement will show that perhaps through a loss. If you are experience a boon, your profit & loss statement will show that you are profiting greatly.

Explain how the cost of sales compares with the actual sales. When you make a sale with your business, there is obviously expense to that. A profit & loss statement will explain how much you spend when you make a sale and how much you profit from that sale.

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