As all small businesses know, the P&L is a necessary component of a complete set of financial statements. Some may view it as the most telling as well. It quickly shows whether your company is in the red or in the black. We’ve prepared an infographic showing how to create the P&L in 6 easy steps. (Well, easy is a subjective opinion.) In a nutshell, the P&L should be calculated as such:

Revenues – Discounts and Returns = Net Sales – COGS =Gross Profit – Operating Expenses = Net Income Before Taxes – Taxes = Net Income After Taxes

 

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