The PnL report is one of the main financial reports in the business. With its help, owners control the budget of their enterprise, and investors evaluate the profitability of investments.

Profit and Loss is a form of financial report that provides a clear picture of the financial condition of the company. It shows the results of the organization's activities for a certain period: income, expenses and net profit.

OFR differs from PnL in its time constraints and the fact that it shows only the quantitative side of the business. PnL does not limit the compiler, either by dates or by the scale of detail. In it, the entrepreneur considers what and how he wants, and can even predict future periods.

For clear performance indicators, the report should cover the full operating cycle of the company. If yours is several days, you can draw conclusions on PnL in a month; if these are long–term transactions, it will be optimal to analyze quarters.

The PnL report is necessary to assess the financial stability of the company. He helps management make budget decisions and provides key financial information for investors, shareholders and creditors. And besides that:

The PnL is compiled as a spreadsheet in Excel or Google Sheets. Small companies usually keep it manually; larger businesses compile this report using third-party programs, for example, “1C:Accounting".

The following indicators are included in the table:

1. Revenue – all income received from the company's activities. This is the basis for all further analysis.

2. Variable costs depend on the volume of production and sales. They reflect the costs of the day-to-day operation of the company.

3. Fixed costs remain the same in all conditions, regardless of the number of customers. These are rent, utility bills, and employee salaries.

4. Gross profit is revenue without variable and fixed expenses.

Commercial expenses are your expenses for promotion. Marketing, salaries of copywriters and SMM specialists, printing costs, and so on.

Administrative expenses are expenses that are not directly related to the goods or services themselves. For example, the cost of paying for banking services and the salaries of managers and administrators.

6. EBITDA (Earnings before interest, taxes, depreciation and amortization) — profit before deduction of interest, taxes and depreciation expenses.

7. Depreciation is the transfer of the cost of tools (machines, machines or human resources) as they wear out to the cost of manufactured products.

For example, the amount of monthly depreciation of a car, if it costs 1 million rubles, and its service life is 8 years, is considered as follows:

8. Taxes and interest on loans. The amount of tax depends on the chosen tax system. Take your figure.

The amount of interest on loans, if you have one, fits into the monetary amount for the period under review. As a rule, for a month or a quarter.

9. Net profit. This is the end result – the profit of your business after deducting all expenses and taxes. This indicator is most important for shareholders and investors. If the net profit is negative, then the business is operating at a loss.

Now let's collect all the above items of income and expenses and compile a PnL report using the example of a random business:

The total profit of the business is 15913 rubles per month. To track the dynamics and draw conclusions, it is worth having PnL reports for several months. Do not forget to leave explanations to the financial report, if the situation requires it, in order to take into account all the nuances when comparing different months.

The preparation of financial reports, in addition to being a duty for the tax service, has great benefits for business development. The PnL income statement is the best form for tracking the dynamics of a company's or sole proprietor's profits.

The PnL report allows companies to analyze key financial indicators, predict the future and plan their activities. It is compiled regularly and is an important element of effective management of the company's financial resources.