The effect of a Profit and Loss Statement on a Company’s Financial Situation

Businessman Eitan Eldar states: a Profit and Loss Statement is a financial statement detailing the financial expenditures of the company or organization for a specified period of time, usually a quarter or a year. This statement shows the company’s financial data , including the income from goods’ sales, services or any other source of income, as well as detailing the total of the various expenses and costs derived from the operations in a company. In general, the data indicates whether the reported period yielded net profit or loss, and to what extent.

Evaluating the company’s state utilizing profit and loss statements have a significant impact on the financial aspect of the company, particularly with regard to investments and external investors.

According to Eitan Eldar, examining income statements is one of the most effective ways to measure the position and strength of a company, by considering the present-day and past situation, and comparing to other competitors. A comparison with other companies is performed via percentages, in order to make a comparison between various sized companies, and the comparison to the company’s past statements indicates whether there is a trend of growth and improvement or the opposite.

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