6 Ways Profit & Loss Statements Help Small Businesses Succeed
The most obvious benefit of your monthly P&L statement is that it shows whether you made more money than you spent — in other words, your net income (or loss). But that’s just the beginning.
1. Check up on company expenses.
2. Analyze the cost of goods or sales (COGS).
3. Prepare for tax season.
4. See how much you can reinvest in the business.
5. Prove you’re a success.
6. Compare yourself to your industry standard.
- The formula: Gross revenues – COGS ÷ gross revenues = GPR
- The formula: Net income ÷ shareholder’s equity = ROE