How to Understand a Profit Loss Statement

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Part of the video series: Business Advice

Summary: In business, a profit-loss statement, or PNL, helps to determine how the cost of goods and expenses affect revenue or income. Understand profit-loss statements with tips from a certified adviser on small business in this free instructional video on starting a business.

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By Paula Roberts
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Paula Roberts is the executive director of the Tennessee State University Small Business Development Center. She has a master's degree in public administration and is a certified...read more

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"How to understand a profit and loss statement. A profit and loss statement is also known as an income statement or a PNL. A PNL helps to determine how cost of goods and expenses affect revenue or income. Cost of goods or COGs are subtracted from monthly sales to determine your gross profit. Expenses are then subtracted from your gross profit to determine your net income. A PNL shows whether a company is profitable for a specified time or if a loss has occurred."