New customers are coming in, production is ramping up, your team is growing—but is your business truly profitable? Or, without realizing it, are you operating on razor-thin margins?
In the world of business, the profit and loss statement (P&L) is one of the most critical financial documents. It helps business owners understand the financial health of their company and make informed decisions for future strategies.
Also Read: WhatsApp Business: Features, Setup, and Key DifferencesWhat is Profit and Loss Statement?
A profit and loss statement summarizes a company’s revenues, expenses, and resulting net profit or loss over a specific period. Most businesses prepare this report monthly, quarterly, or annually.
With a P&L statement, business owners can:
- Evaluate the effectiveness of their strategies
- Assess financial performance
- Make smarter operational and investment decisions
Example of P&L Statement
Here is a simple example of a profit and loss statement:
Where the figures came from
Sales Revenue
- In April 2020, PT DOO BEE DOO sold products worth IDR 1 billion.
- However, the company gave out discounts totaling IDR 48 million and accepted returns worth IDR 22 million.
- So, to calculate net revenue, total sales must be reduced by discounts and returns.
COGS (Cost of Goods Sold)
- There were 10 leftover items from March, each purchased at IDR 5 million, making the beginning inventory worth IDR 50 million.
- PT DBD purchased 100 new items in April, with a total purchase value of IDR 500 million.
- By the end of April, 4 items remained unsold, making the ending inventory IDR 20 million.
- So, COGS = 50 + 500 - 20 = IDR 530 million
🔍️ Find out how to more details about COGS: Its importance and formula
Operating Profit
- Net revenue minus COGS.
Operating Expenses
- Running a business involves costs such as salaries and other expenses.
- In this case, total operating expenses amount to IDR 120 million.
- Operating profit minus expenses gives the pre-tax profit.
Net Profit
- Finally, the pre-tax profit is reduced by applicable taxes to calculate the net profit.
Why Every Business Needs a P&L Statement
See how much you earn, spend, and whether you're making a profit.
Use accurate data to evaluate costs, pricing, and business strategies.
Spot trends to forecast revenue, manage budgets, and support growth.
Track money in and out to avoid liquidity issues.
A clear P&L builds credibility with investors and lenders.
Accurate reports help you meet tax obligations and avoid penalties.
Profit & Loss Report Made Easy with Odoo
Odoo is an integrated platform that tracks every business transaction—from sales and purchases to expenses and payments. Even varying purchase prices for the same product can be logged accurately in the system.
With Odoo, you can:
- Track revenue from each project or service
- Manage operational expenses
- Generate P&L statements by project or by period
Benefits of Using ERP to Create P&L Statements
Real-Time ⏲️
Data updates automatically with each transaction
Integrated 🧩
Everything is connected—from sales and inventory to accounting
Accurate 🔎
All data automatically recorded, minimizes manual entry errors
Customizable ✒️
Tailor reports to match your business needs
P&L Statement for Trading Companies
For trading or retail businesses, the P&L format includes the cost of goods sold (COGS).
Other common components include operational expenses like salaries, utilities, and rent.
P&L Statement for Service Companies
Instead, their P&L focuses on service revenue and operating costs such as employee salaries, office rent, software subscriptions, and other overheads.
🧠 Thinking of simplifying your financial reports?
If you're exploring ways to move beyond manual spreadsheets and want clearer insights into your business performance, tools like Odoo can help.
An integrated system can make creating profit and loss statements faster, easier, and more accurate—so you can focus on growing your business.
