What is PnL? Why do investors need to look at the profit and loss statement

Profit and Loss Statement or PnL is a financial document that tells us one important thing: Is this business profitable or at a loss? And where does the money come from and go to?

This is why investors, business owners, and managers need to understand the PnL deeply, because it reveals how much profit the business makes and which strategies to adjust to increase profits.

What is PnL?

Profit and Loss Statement (PnL) is a summary of a business’s operations over a specified period, showing:

• Total revenue (How much money the business has earned)
• Total expenses (How much money the business has spent)
• Difference = profit or loss

From this information, managers understand which expenses to cut, how to adjust prices, or find new revenue sources to ensure sustainable profit.

Basic formula: The simplest PnL