Income Statement (P&L)
Definition
The financial statement that shows revenue, costs and profit over a period of time, usually a month, quarter or year.
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Formula
Net Income = Revenue − COGS − Operating Expenses − Interest − TaxesThe P&L is the report most owners read first. For e-commerce, the most useful version groups costs by COGS, variable selling costs and fixed overhead, so contribution margin is visible on the page.
A P&L is only as accurate as the inventory and accruals behind it. Watch for: profit that does not match the change in cash, which is normal, but should be explained by the cash flow statement.
Example
March: $250,000 of net sales, $140,000 of COGS and $85,000 of operating expenses, for $25,000 of operating income.