What the hell is a P&L? For People Who Couldn’t Care Less About Finance (In 3 minutes)

The one investors and shareholders care about

To understand businesses, you need to understand financial statements — even if you couldn’t care less about finance.

But, it doesn’t need to be difficult.

Finance sounds tricky because finance people like being seen doing tricky things.

It’s actually very straightforward.

Here’s everything you need to know about the Profit & Loss (or ‘P&L’) — in 3 minutes.

It’s telling you how much your business earned

Let’s say you have a business.

Let’s say you own a flat and you’re renting it out through Airbnb.

The P&L tells you how much your business earned in the last period, after taking off everything you spent on running the business.

Gross profit

The first number people care about is revenue, sometimes called sales or turnover. That’s the amount your guests paid via Airbnb to stay in your flat.

When people talk about the size of a business, they usually refer to the revenue figure.