1 00:00:00,012 --> 00:00:04,190 All right, we are almost done with the profit and loss statement. 2 00:00:04,190 --> 00:00:07,482 But we have a few more line items to cover. 3 00:00:07,482 --> 00:00:11,020 Interest in taxes are exactly what they sound like. 4 00:00:11,020 --> 00:00:15,530 Interest is an expense of business has for the interest payments they make for 5 00:00:15,530 --> 00:00:16,890 any debit facilities they have. 6 00:00:17,920 --> 00:00:21,220 Taxes are the expense for any taxes the business has to pay. 7 00:00:22,460 --> 00:00:26,770 Tax is a massive topic in accounting, and there's a ton of complexity to it, 8 00:00:26,770 --> 00:00:30,550 because of the different tax laws around the world. 9 00:00:30,550 --> 00:00:34,260 Furthermore, tax accounting rules are sometimes different than 10 00:00:34,260 --> 00:00:35,650 book accounting rules. 11 00:00:35,650 --> 00:00:40,530 So, it's just a complicated topic we don't have time to cover in this course. 12 00:00:40,530 --> 00:00:43,900 In the teacher's notes, there are some links to articles about this, 13 00:00:43,900 --> 00:00:45,920 if you are inclined to explore it further. 14 00:00:47,130 --> 00:00:52,960 Other gains and losses are expenses that don't fit into the categories above. 15 00:00:52,960 --> 00:00:57,060 Sometimes, these are charges related to a restructuring, or for 16 00:00:57,060 --> 00:01:01,440 winding down a business that you are no longer going to be operating. 17 00:01:01,440 --> 00:01:02,670 Maybe it's a write-off charge. 18 00:01:03,850 --> 00:01:10,860 But after all the COGS, SG&A, depreciation and amortization, interest, taxes, and 19 00:01:10,860 --> 00:01:15,880 other gains or losses are accounted for, we arrive at the net profit line. 20 00:01:15,880 --> 00:01:19,270 Or sometimes is called net income. 21 00:01:19,270 --> 00:01:21,330 This is the profit profit. 22 00:01:21,330 --> 00:01:27,300 If a company is profitable, you will see a net profit and a positive number here. 23 00:01:27,300 --> 00:01:30,770 If the company is not profitable, then it is a net loss, and 24 00:01:30,770 --> 00:01:33,250 you will see a negative number here. 25 00:01:33,250 --> 00:01:37,560 This line item is the bottom line, literally, figuratively, 26 00:01:37,560 --> 00:01:39,210 whatever you want to say. 27 00:01:39,210 --> 00:01:42,460 So, when people refer to the bottom line in finance and 28 00:01:42,460 --> 00:01:45,210 accounting, this is typically what they say. 29 00:01:46,780 --> 00:01:51,760 We also see here another example of the difference between gross and net. 30 00:01:51,760 --> 00:01:56,130 Gross profit is a profit metric after COGS have been accounted for. 31 00:01:56,130 --> 00:02:00,480 But there's lots of other costs before we get to net profit. 32 00:02:00,480 --> 00:02:03,970 You use these metrics to understand different things. 33 00:02:03,970 --> 00:02:08,810 But don't make the mistake saying, hey, we made a gross profit this quarter so 34 00:02:08,810 --> 00:02:09,890 we're profitable. 35 00:02:09,890 --> 00:02:10,430 That's wrong. 36 00:02:11,510 --> 00:02:15,990 Okay, pretty cool how much information there is on the PNL, right? 37 00:02:15,990 --> 00:02:17,670 We're going to move on to a quiz now and 38 00:02:17,670 --> 00:02:21,300 in the next stage of this course, we'll introduce the balance sheet