Heads up! To view this whole video, sign in with your Courses account or enroll in your free 7-day trial. Sign In Enroll

Financial Statement Basics

Preview

Start a free Courses trial
to watch this video

Sign up for Treehouse

What is the Profit & Loss Statement

2:41 with Michael Watson

Introducing the Profit & Loss Statement and the Revenue line item

Related Discussions

Have questions about this video? Start a discussion with the community and Treehouse staff.

Sign up

    Related Discussions

    Have questions about this video? Start a discussion with the community and Treehouse staff.

    Sign up

    [MUSIC] 0:00
    The profit and loss statement, or P and L for short, is a statement that shows 0:04
    all earned revenue and incurred expense items for a particular period of time. 0:10
    Publicly listed companies usually prepare their financial statements for 0:16
    a quarter or a fiscal year. 0:20
    We prepare financial statements monthly at Treehouse. 0:22
    The P and L is the same thing as the income statement. 0:26
    It's just called different things in different markets, 0:29
    as are some of the line items on the financial statements. 0:33
    So here we are looking at Apple's P and L, or as they call it, 0:37
    a consolidated statements of operations. 0:41
    Typically when you're looking at a P and 0:45
    L, you'll see the revenue section at the top. 0:47
    Sometimes P and Ls will show sales or 0:50
    turnover instead of revenue, they're basically the same thing. 0:53
    Some industries favor certain terms over others. 0:58
    So, revenue is the first line item you see on their P and L. 1:02
    And this is why revenue is sometimes referred to as the, quote, top line. 1:06
    Metrics related to revenue may be called, quote, top line metrics. 1:10
    Revenue represents the amount of money you have 1:15
    earned from your activities during this period. 1:18
    Note, I didn't say the amount of revenue or money you have collected. 1:20
    It's the amount of revenue you have earned. 1:25
    Apple is reporting their fiscal year 2018 financials. 1:28
    At the top of the columns on the right, we can see that Apple's fiscal year ends in 1:32
    September, or at the end of what is typically Q3 in the calendar year. 1:37
    A company doesn't have to have the reporting schedule on the same cycle 1:43
    as the calendar year. 1:47
    There's some articles providing further information on that 1:49
    in the teacher's notes. 1:52
    Back to the P and L, you can see that Apple reports a figure known as net sales. 1:54
    Net sales is different than gross sales, the difference can again vary by company. 2:00
    But usually, the difference has to do with refunds, discounts, returns, and breakage. 2:05
    So net is after some item has been subtracted and 2:12
    gross is before that happens, maybe this is personally relatable. 2:16
    Your gross income is your income before any taxes have been withheld. 2:21
    Net income is after those taxes have been removed. 2:26
    This gross and net distinction shows up in many places in accounting. 2:29
    And actually leads us nicely into our next video about cost of goods sold and 2:34
    gross profit. 2:39

    You need to sign up for Treehouse in order to download course files.

    Sign up

      You need to sign up for Treehouse in order to set up Workspace

      Sign up