Profit and Loss (P&L) statements are financial documents used to measure the performance of a business. They tell us whether the business has made a profit or a loss over a period of time, usually one year. On a P&L statement, total revenues from all sources are subtracted from total expenses, resulting in either a “net income” (meaning a profit) or an “operating loss” (meaning a loss). Knowing a company’s profit and loss helps investors make decisions around investing in the stock market, and it provides information that can be used for decision-making within a business. In other words, understanding your P&L gives you the power to see success or failure before it happens.