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A Profit & Loss (P&L) statement, also called an Income Statement, summarises a business's revenues, costs, and expenses over a specific period (month, quarter, or year). The bottom line shows net profit or net loss.

Gross Profit = Revenue − Cost of Goods Sold (direct costs only). Net Profit = Gross Profit − Operating Expenses − Interest − Tax. Gross profit shows production efficiency; net profit shows overall profitability.

Include all business expenses: Cost of Goods Sold (materials, direct labour), operating expenses (rent, salaries, utilities, marketing, insurance, depreciation), interest expenses, and tax provisions. Separate them into categories for clarity.

Monthly review is recommended to spot trends, control costs, and make timely decisions. Quarterly reviews help with tax planning. Annual P&L is required for statutory filing and audit purposes.