Your Financial Statements - Profit and loss
Profit and Loss
Let's continue this week with your income statement also known as profit and loss (the P&L) for your company. Your P&L is a summary of your income and your costs and expenses for a set period of time, typically done monthly or quarterly for a company. Most P&L statements are compared to a yearly budget for the company to keep you on track for your yearly goals. It answers one question, is the company profitable?
Your P&L is one of three financial statements that are shared with you in order to get a full and clear picture of your financial health. The P&L should be accompanied by your balance sheet and your cash flow for the month. The P&L is different from the cash flow because under the accrual method of accounting, revenues and expenses can be logged before cash is exchanged.
Why do I need a CFO?
You didn't start your business or become the head of an organization because you are a financial expert. You are there to grow and succeed. The accounting, bookkeeping and financial aspects of your business are important to how you run your company, but it is time consuming and if not done properly, can lead to more headaches down the road.
Keeping track of your bookkeeping and your financial statements is time consuming and difficult to manage. But most frustrating is understanding and interpreting your financial picture from reports. CFOs are responsible for timely and accurate presentations and financial reports in order to capitalize on your growth.