What is a profit and loss statement?

A profit and loss statement (P&L) is a report used to gauge a trader’s profitability over a period of time. Online exchanges typically provide these on their platforms to allow traders to see how well they have been performing, based on their profits earned minus their losses.

P&L statements are also put out by companies in financial documents, such as quarterly reports. These show how much profit the company has earned compared to how much it has spent on its overheads. These are then used by investors as a tool for helping to determine a company’s growth rate and profitability, forming the basis for making investments or outlining a valuation. It differs from a company’s financial statements in that it provides an insight into how a company has been operating over a specific period of time. Financial statements just give the final amounts on the reporting date.