How a profit & loss statement is built
Gross profit = Revenue − COGS
EBITDA = Gross profit + Other income − Operating expenses
PBT = EBITDA − Depreciation − Interest → PAT = PBT − Tax
The P&L (income statement) tells the story of a period: what you sold, what it cost to sell it, what running the business cost, and what's left. Gross margin shows pricing health; operating profit shows whether overheads fit your scale; net profit is what the owner actually earned.
Reading your numbers
- Gross margin falling? Input costs are rising faster than your prices.
- Healthy gross but thin net? Overheads — rent, salaries, marketing — are too heavy.
- Profit but no cash? Check receivables and stock with our Cash Flow Calculator.