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What is a Gain and Loss Statement (P&L)?
The gain and loss (P&L) announcement is a financial statement that summarizes the earnings, expenses, and expenses incurred during a specified period, normally a fiscal year or quarter. The P&L announcement means the same thing as the income announcement. These documents provide information about the ability or inability of a company to create gain by increasing revenue. Some refer for a statement of earnings and loss, income statement, statement of operations, statement of outcomes or earnings, earnings announcement, or expenditure statement to this P&L announcement.
P&L management describes how its P&L announcement is handled by a business through price and earnings management.
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KEY TAKEAWAYS
- The P&L announcement is a financial statement that summarizes the earnings, costs, and expenses incurred during a specified period.
- The P&L announcement is just one of three financial statements each public company issues quarterly and yearly, together with the balance sheet and the cash flow statement.
- It's crucial to compare P&L statements from various accounting periods, as the fluctuations in revenues, operating expenses, R&D spending, and net profits over the years are more purposeful than the amounts themselves.
- Along with the balance sheet and cash flow statement, the P&L announcement offers a comprehensive look in an organization's financial performance.
Knowing a Profit and Loss Statement (P&L)
The P&L announcement is just one of three financial statements each public company issues quarterly and yearly, alongside the balance sheet along with the cash flow statement. Since it shows how much gain or loss was created by a business enterprise, It's frequently the most popular and frequent statement in a company plan.
The earnings statement, such as the cash flow statement, reveals changes in accounts within an interval that is set. The balance sheet, on the other hand, is a picture, revealing what the business owes and owns in a moment. It's crucial to compare the earnings statement because, before money changes hands, a corporation may log earnings and expenses under the accrual method of accounting.
As seen from the case below, the income announcement follows an overall form. It starts with an entrance subtracts the costs of doing business, and called the line, including interest costs, tax costs, operating costs, and the cost of goods sold. The difference, called the main point, is online revenue, also known as earnings or profit. For producing a personal or company P&L statement online for 16, It is possible to discover templates.
It's crucial to compare earnings statements as the fluctuations in operating expenses, revenues, research, and development spending, and net profits over the years are more purposeful than the amounts. By way of instance, the earnings of a company can raise, but its expenditures may grow at a pace that is quicker.
Gain and Loss Statement (P&L) Example
Below is Caterpillar Inc's earnings or P&L announcement for 2013 and 2014 (all amounts in USD millions except per-share information ):1
| Twelve Months Ended December 31, | 2014 | 2013 |
| Earnings and revenues: | ||
| Revenue of Machinery, Energy & Transportation | 52,142 | 52,694 |
| Revenues of Financial Products 3,042 | 2,962 | |
| Complete earnings and earnings | 55,184 | 55,656 |
| Running costs: | ||
| Cost of goods sold | 39,767 | 40,727 |
| Selling, administrative and general expenditures | 5,697 | 5,547 |
| research and development expenditures | 2,135 | 2,046 |
| Interest expense of Financial Products | 624 | 727 |
| Other operating (income) expenses | 1,633 | 981 |
| Total operating costs | 49,856 | 50,028 |
| Running gain | 5,328 | 5,628 |
| Interest expense excluding Financial Products | 484 | 465 |
| Other income (expense) | 239 | (35) |
| Consolidated profit before taxation | 5,083 | 5,128 |
| Provision (benefit) for income taxes | 1,380 | 1,319 |
| Profit of consolidated companies | 3,703 | 3,809 |
| Equity in gain (loss) of unconsolidated affiliated companies | 8 | (6) |
| Gain of consolidated and affiliated businesses | 3,711 | 3,803 |
| Less: Gain (loss) attributable to noncontrolling interests | 16 | 14 |
| Gain [footnote 1: Gain attributable to ordinary shareholders] | 3,695 | 3,789 |
| Gain per common share | 5.99 | 5.87 |
| Gain per common share -- diluted [footnote 2: Diluted by supposed practice of stock-based compensation awards using the treasury stock method] | 5.88 | 5.75 |
| Weighted-average common shares outstanding (millions) | ||
| - Fundamental | 617.2 | 645.2 |
| - Diluted [see footnote 2] | 628.9 | 658.6 |
| Cash dividends declared per common share | 2.70 | 2.32 |
An individual may use the earnings statement to compute several metrics, for instance, the gross profit margin, the operating profit margin, the net profit margin, and the operating ratio. Along with the cash flow statement and the balance sheet, the earnings statement offers a comprehensive look at the financial performance of a company.
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