P&L is the common abbreviation for the profit and loss statement, the financial statement more formally called the income statement. It reports a business's revenues, expenses, gains and losses for a stated period, such as a month, a quarter or a year, and ends with the profit or loss for that period.
How the P&L is used
Owners and managers often say "the P&L" when they mean the operating results of a whole company, a division, a store or a single product line. A manager who is said to own a P&L is responsible for both the revenue and the costs of that unit and is judged on its profit. Banks ask for a borrower's P&L to see whether earnings can support loan repayments, and investors compare one year's P&L with the next to judge growth.
The statement starts with revenue, deducts the cost of goods sold to reach gross profit, and then subtracts operating expenses, interest and income taxes to arrive at net income, often called the bottom line. A multiple-step income statement shows each of these subtotals separately, while a single-step format groups all revenues and all expenses together. Unlike the balance sheet, which is a snapshot at one date, the P&L covers a span of time. Its revenue and expense accounts are closed out at the end of each year, so the next year's P&L starts again from zero.