PNL: rules for compilation and analysis
Posted: Sat Jan 18, 2025 10:28 am
What is it? PNL is a business profit and loss statement that is used by company owners to evaluate its performance, and by investors to determine the investment attractiveness of the organization.
What is required? Compiling a PNL report requires analyzing the company's revenue, variable and fixed costs, depreciation, and a number of other parameters. Additionally, marginality and money supply turnover are calculated.
The article explains:
The concept of PNL
PNL Tasks
The difference between PNL and DDS
Stages of PNL report preparation
Additional indicators for compiling PNL
Analysis and possible errors in drawing up PNL
Generating a PNL report in Excel
Frequently asked questions about PNL
5 Scenarios for Using Neural Networks to Increase Website Conversion by 40%
Download for free
The concept of PNL
PNL is an abbreviation for the business owner data package English phrase Profit&Loss Statement. This abbreviation denotes a report on the profit and loss of an enterprise for a certain period of time.
In modern business literature, you can also find such names as "profit and loss statement of the company" and "report on income and expenses of the organization", but in the business environment, it is this abbreviation that has firmly taken root - PNL. This report is one of the main metrics in assessing the financial activities of the company, therefore it is based on information about the revenue and expenses of the corporation.
PNL is used not only in the business environment. For example, this indicator is present in user wallets on all cryptocurrency exchanges. With its help, traders can see changes in their own deposit for a certain period of time.
What is PNL
Source: shutterstock.com
If a company's revenues exceed its expenses, PNL is a positive indicator. If the company's expenses are greater than its profits, PNL is a negative number.
PNL is a metric that needs to be accumulated and analyzed dynamically. This approach allows for a detailed assessment of the current state and development of the business, which is especially important when strategic goals are set for scaling or releasing new products.
You shouldn't confuse such indicators as PNL, the company's revenue and its operating profit. Let's figure out how they differ.
Revenue is the total income of a company received as a result of selling its products or providing services over a certain period of time. In simple terms, this is all the financial resources that the organization earned in a month, quarter, year. For example, a home bakery sold gingerbread worth 50,000 rubles in a month. Accordingly, the monthly revenue for this time period was 50,000 rubles.
Operating profit is the income received by an enterprise as a result of its core business activities for a specific period of time. That is, this indicator is calculated as the difference between revenue and expenses incurred to obtain it. Let's return to the example with a bakery that sold its products for 50,000 rubles in a month. At the same time, it spent 5,000 rubles on advertising in the Telegram channel of a popular city community and 8,000 rubles on delivery. Let's calculate the operating profit: 50,000 rubles - 5,000 rubles - 8,000 rubles = 37,000 rubles.
PNL in the example under consideration will be calculated as the company's revenue minus operating costs, taxes and other mandatory payments for a certain period of time. That is, the PNL indicator of a bakery for one working month, provided that it pays 15% tax on its income, is equal to 35,000 rubles (50,000 rubles - 13,000 rubles - 2,000 rubles).
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Formula for calculating Profit&Loss
PnL = cash earned by an enterprise over a specific time period – costs incurred over that time period
That is, this formula can be simplified to the following form:
PnL = revenue – costs
The calculation of PNL will differ depending on the type of business activity carried out. In the example considered above, a limited number of indicators were taken into account when calculating this metric, since the home bakery is a small business
What is required? Compiling a PNL report requires analyzing the company's revenue, variable and fixed costs, depreciation, and a number of other parameters. Additionally, marginality and money supply turnover are calculated.
The article explains:
The concept of PNL
PNL Tasks
The difference between PNL and DDS
Stages of PNL report preparation
Additional indicators for compiling PNL
Analysis and possible errors in drawing up PNL
Generating a PNL report in Excel
Frequently asked questions about PNL
5 Scenarios for Using Neural Networks to Increase Website Conversion by 40%
Download for free
The concept of PNL
PNL is an abbreviation for the business owner data package English phrase Profit&Loss Statement. This abbreviation denotes a report on the profit and loss of an enterprise for a certain period of time.
In modern business literature, you can also find such names as "profit and loss statement of the company" and "report on income and expenses of the organization", but in the business environment, it is this abbreviation that has firmly taken root - PNL. This report is one of the main metrics in assessing the financial activities of the company, therefore it is based on information about the revenue and expenses of the corporation.
PNL is used not only in the business environment. For example, this indicator is present in user wallets on all cryptocurrency exchanges. With its help, traders can see changes in their own deposit for a certain period of time.
What is PNL
Source: shutterstock.com
If a company's revenues exceed its expenses, PNL is a positive indicator. If the company's expenses are greater than its profits, PNL is a negative number.
PNL is a metric that needs to be accumulated and analyzed dynamically. This approach allows for a detailed assessment of the current state and development of the business, which is especially important when strategic goals are set for scaling or releasing new products.
You shouldn't confuse such indicators as PNL, the company's revenue and its operating profit. Let's figure out how they differ.
Revenue is the total income of a company received as a result of selling its products or providing services over a certain period of time. In simple terms, this is all the financial resources that the organization earned in a month, quarter, year. For example, a home bakery sold gingerbread worth 50,000 rubles in a month. Accordingly, the monthly revenue for this time period was 50,000 rubles.
Operating profit is the income received by an enterprise as a result of its core business activities for a specific period of time. That is, this indicator is calculated as the difference between revenue and expenses incurred to obtain it. Let's return to the example with a bakery that sold its products for 50,000 rubles in a month. At the same time, it spent 5,000 rubles on advertising in the Telegram channel of a popular city community and 8,000 rubles on delivery. Let's calculate the operating profit: 50,000 rubles - 5,000 rubles - 8,000 rubles = 37,000 rubles.
PNL in the example under consideration will be calculated as the company's revenue minus operating costs, taxes and other mandatory payments for a certain period of time. That is, the PNL indicator of a bakery for one working month, provided that it pays 15% tax on its income, is equal to 35,000 rubles (50,000 rubles - 13,000 rubles - 2,000 rubles).
Read also!
"Sample proposal for cooperation: just follow the instructions!"
Read more
Formula for calculating Profit&Loss
PnL = cash earned by an enterprise over a specific time period – costs incurred over that time period
That is, this formula can be simplified to the following form:
PnL = revenue – costs
The calculation of PNL will differ depending on the type of business activity carried out. In the example considered above, a limited number of indicators were taken into account when calculating this metric, since the home bakery is a small business