Understanding Operating Statements
An operating statement — also called an income statement or a profit and loss (P&L) statement — shows how well a company performed financially over a certain period. It’s basically a summary of all the money that came in (revenue), all the money that went out (expenses), and whether the company made a profit or took a loss.
These statements are crucial for all sorts of things. They help companies make smart decisions, keep costs under control, track growth, figure out how profitable they are, create budgets, and stay transparent. Investors also rely on them to understand the company’s financial health before deciding whether or not to invest.
In this article, we’ll dig into all the different parts of an operating statement, how they’re used, how they differ from other financial reports, common mistakes to avoid, and how automation can help.
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