1 00:00:00,000 --> 00:00:04,966 [MUSIC] 2 00:00:04,966 --> 00:00:10,195 The profit and loss statement, or P and L for short, is a statement that shows 3 00:00:10,195 --> 00:00:16,480 all earned revenue and incurred expense items for a particular period of time. 4 00:00:16,480 --> 00:00:20,140 Publicly listed companies usually prepare their financial statements for 5 00:00:20,140 --> 00:00:22,940 a quarter or a fiscal year. 6 00:00:22,940 --> 00:00:26,590 We prepare financial statements monthly at Treehouse. 7 00:00:26,590 --> 00:00:29,990 The P and L is the same thing as the income statement. 8 00:00:29,990 --> 00:00:33,310 It's just called different things in different markets, 9 00:00:33,310 --> 00:00:36,150 as are some of the line items on the financial statements. 10 00:00:37,640 --> 00:00:41,747 So here we are looking at Apple's P and L, or as they call it, 11 00:00:41,747 --> 00:00:45,690 a consolidated statements of operations. 12 00:00:45,690 --> 00:00:47,650 Typically when you're looking at a P and 13 00:00:47,650 --> 00:00:50,910 L, you'll see the revenue section at the top. 14 00:00:50,910 --> 00:00:53,715 Sometimes P and Ls will show sales or 15 00:00:53,715 --> 00:00:58,790 turnover instead of revenue, they're basically the same thing. 16 00:00:58,790 --> 00:01:02,250 Some industries favor certain terms over others. 17 00:01:02,250 --> 00:01:06,040 So, revenue is the first line item you see on their P and L. 18 00:01:06,040 --> 00:01:10,800 And this is why revenue is sometimes referred to as the, quote, top line. 19 00:01:10,800 --> 00:01:15,100 Metrics related to revenue may be called, quote, top line metrics. 20 00:01:15,100 --> 00:01:18,010 Revenue represents the amount of money you have 21 00:01:18,010 --> 00:01:20,740 earned from your activities during this period. 22 00:01:20,740 --> 00:01:25,070 Note, I didn't say the amount of revenue or money you have collected. 23 00:01:25,070 --> 00:01:27,130 It's the amount of revenue you have earned. 24 00:01:28,170 --> 00:01:32,600 Apple is reporting their fiscal year 2018 financials. 25 00:01:32,600 --> 00:01:37,270 At the top of the columns on the right, we can see that Apple's fiscal year ends in 26 00:01:37,270 --> 00:01:43,410 September, or at the end of what is typically Q3 in the calendar year. 27 00:01:43,410 --> 00:01:47,420 A company doesn't have to have the reporting schedule on the same cycle 28 00:01:47,420 --> 00:01:49,190 as the calendar year. 29 00:01:49,190 --> 00:01:52,400 There's some articles providing further information on that 30 00:01:52,400 --> 00:01:54,000 in the teacher's notes. 31 00:01:54,000 --> 00:02:00,110 Back to the P and L, you can see that Apple reports a figure known as net sales. 32 00:02:00,110 --> 00:02:05,510 Net sales is different than gross sales, the difference can again vary by company. 33 00:02:05,510 --> 00:02:12,010 But usually, the difference has to do with refunds, discounts, returns, and breakage. 34 00:02:12,010 --> 00:02:16,950 So net is after some item has been subtracted and 35 00:02:16,950 --> 00:02:21,510 gross is before that happens, maybe this is personally relatable. 36 00:02:21,510 --> 00:02:26,090 Your gross income is your income before any taxes have been withheld. 37 00:02:26,090 --> 00:02:29,230 Net income is after those taxes have been removed. 38 00:02:29,230 --> 00:02:34,278 This gross and net distinction shows up in many places in accounting. 39 00:02:34,278 --> 00:02:39,840 And actually leads us nicely into our next video about cost of goods sold and 40 00:02:39,840 --> 00:02:40,620 gross profit.