This video is the easiest tutorial of profit and loss statement you can find. You have to follow six simple steps to make P&L in Excel, QuickBooks, or any other accounting application. Profit and loss statement for small businesses is one of the most important accounting and managerial doc. I will give you a very simple example of P&L, I would say profit and loss statement for dummies. WATCH MORE VIDEOS: 1.How to make profit and loss statements https://youtu.be/iA_FEpP0ciE 2. Best Template to build family profit & loss statement https://youtu.be/GuHJIPKnuf0 🚀🚀 Support my work on Patreon or buy me cup of coffee :) http://bit.ly/30LjfmM 🏠Open Fundrise account and pay zero advisory fees for 90 days https://bit.ly/3qnM9E2 💰 ROBINHOOD (Get 1 Stock When You Sign Up): http://bit.ly/3nksZNy 💰 How I Store and Protect My Digital Currency: http://bit.ly/3oneJoS 💰 Get $10 from M1Finance: http://bit.ly/35dSk5z 💰 Betterment - Robo-advising platform I trust to manage my money. Get your entire balance managed free for up to 17 months. www.bit.ly/3hKXKKo 💰 Personal Capital - the best app I use every day to track my financial wealth https://bit.ly/3dOyJ0Y What Is a Profit and Loss Statement (P&L)? The profit and loss (P&L) statement is a financial statement that summarizes the revenues, costs, and expenses incurred during a specified period, usually a fiscal quarter or year. The P&L statement is synonymous with the income statement. These profit and loss statements in excel provide information about a company's ability or inability to generate profit by increasing revenue, reducing costs, cost of goods sold, or both. Some refer to the P&L statement as a statement of profit and loss, income statement, statement of operations, statement of financial results or income, earnings statement, or expense statement. It is also very important for your business bookkeeping. There are 5 key numbers you must include into a statement: Revenue. It is a total volume of money coming to you from your business, everything that came to your pocket and bank account. Direct costs. It is the total number of your expenses on the products or services you sell. For example, if you sell a product, its supplier’s cost will be your direct cost. Gross profit. It is the number, which indicates the difference between your revenue and direct costs. For example, if you bought a bike at the supplier’s cost of 1,000 USD and sold it for 1,500 USD your gross profit will be 500 USD. Expenses. All other losses you experienced to run your business and finance. They are in most cases: 1) renting an office; 2) administrative needs; 3) advertising; 4) salaries (if any); 5) telephone, internet, electricity payments; 6) taxes; 7) loan interest payments (if you have a loan). 8)business credit. Net operating profit. Your final and the most important number in the statement. It is the difference between your gross profit and expenses. How to make up a profit and loss statement? Step 1. Define the period you will calculate your profit. The best options are 1) one month; 2) 3 months (a quarter); 3) one year. Which option is the best? Well, if you are the only person to care about your money, the best way to control them is by making monthly statements. Step 2. Calculate all the income you have got for this period. This will be your revenue number. Do not include the calculation itself, just the resulting number. Step 3. Calculate all direct costs, but do not include calculations in the statement. Again, you will need only the result. Step 4. Estimate your gross profit. Put the result in the statement only. Step 5. Calculate your expenses. Do not include your inventory and unsold products or services - they are balance sheet numbers. Step 6. Get your net profit number by extracting expenses from your gross profit. The resulting number shows your profit (if it is positive) or loss (if it is negative). How to use a profit and loss statement? Your net profit number is the result of 1) revenues, 2) direct costs and 3) expenses numbers. That means you can analyze the difference between all three numbers to find out your strengths and weaknesses. For example, if direct costs are equal to revenues, it is time to negotiate your suppliers or change them! Or if your expenses are much larger than gross profit, you need to cut them immediately (find a cheaper office or internet provider, for example). What does a profit and loss statement look like? P&L analysis requires the use of any spreadsheet tool to create a statement (Excel, Word), but if you want to save time on calculations, Excel is the best option as it allows including ready formulas. ⬇️LET'S CONNECT: fb.me/TheFirstMillionBusiness https://twitter.com/TheFirstMLN