A company’s income, expenses, and net profit or loss for a given period are all listed in a profit and loss (P&L) statement, a financial record. Because it gives business owners and investors a sense of how the company is doing financially, it is a crucial tool. Businesses can use a P&L statement template to construct their own P&L statements in a pre-designed manner.
Many elements, including revenue, cost of goods sold, gross profit, operating expenditures, net income, and earnings per share, can be found in a P&L statement template. Cost of goods sold refers to the expenses paid in manufacturing and providing those products or services, whereas revenue denotes the money a corporation receives from sales. Operating expenses include the costs of running the firm, such as payroll, rent, and utilities. Gross profit is derived by deducting the cost of goods sold from revenue. The sum that remains after all costs have been deducted from revenue is known as net income.
Whether rent money is regarded as an equity is one query that frequently arises with relation to P&L statements. Rent income is not an equity, hence the answer is no. Equity is the ownership stake held by the company’s shareholders and is defined as the value of a company’s assets less its liabilities. Contrarily, rent revenue is only money made from renting out a building or area. In the P&L statement, it is regarded as a component of the company’s revenue, but it is excluded from the computation of equity.
An effective tool for firms to monitor their financial performance and make wise decisions is a P&L statement template, in conclusion. It gives a precise picture of a business’s earnings, costs, and net profit or loss over a specific time frame. While crucial for companies that lease out real estate or office space, rent money is merely included in the revenue portion of the P&L statement because it is not regarded as an equity. Businesses can better manage their finances and make future plans by employing a P&L statement template and comprehending its components.