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The Profit and Loss Statement

The profit and loss statement, also known as the income statement, is a key financial overview that provides insight into the financial performance of your business over a specific period. This statement is generated for you based on the entered revenue, costs, and investments. Below is an explanation of the most important aspects of the profit and loss statement:

1. Calculation of the profit and loss statement: The statement is based on your input for revenue and cost items. Revenue reflects total income from the sale of your products or services. Costs include all expenditures necessary to run your business, such as purchasing costs, personnel expenses, marketing costs, and general operating expenses.

2. Impact of depreciation: Depreciation from investments affects the profit and loss statement. Depreciation refers to annual expenses allocated to the reduction in value of assets such as buildings, equipment, or vehicles. These depreciations reduce your company’s profit as they increase total costs, thus affecting the final result.

3. Importance of the profit and loss statement: This financial report is crucial for measuring and evaluating your business’s profitability. It gives you insight into the relationship between your revenue and costs and helps assess whether your company is profitable. It also enables you to identify trends and make financial decisions based on the results.

4. Financier’s perspective: Financiers, such as banks or investors, review the profit and loss statement to assess the financial health of your company. They want to know if your business is profitable and capable of meeting financial obligations. A positive net result inspires confidence and may increase your chances of securing financing for growth or expansion.

In summary, the profit and loss statement is an essential tool for evaluating your company’s financial performance, understanding its profitability, and analyzing the balance between revenue and expenses. It supports sound financial decision-making and serves as a critical reference for financiers assessing your business's viability.