What is Profit&Loss (P&L) Statement ?

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Definition : Also known as Income statement, is a financial statement which shows expenses and revenue of a company during a particular period, usually a fiscal quarter or year.
Read : What Is Balance Sheet ?
Income Statement helps to convey the status of a company i.e. Company is making profit or suffering losses. It is very important to read Income Statement of a company before investing, both of recent and past years.
Note : Revenue : Total amount received from sales of goods and services. Expenses : Total amount spend in producing final product or service.
Structure of P&L Statement  Income Statement is divided into Five main section - Net sales, Cost of Goods Sold, Gross Margin, Operating Expenses and Net Profit Before & After Income Tax (Or Net Loss in case of Loss).
Net Sales : It is the sum of Gross sales excluding its returns, allowances and discounts.Cost Of Goods Sold : Amount of money used to produce the final product. For example cost of inventory, merchandise purchased…

Difference Between Face value And Market Value


Share Price usually consist of Two values - One which is declared at the time of issuing IPO, called Face Value and Other is the price at which investors buy or sell stocks, called Market value.

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Market Value 

It is the common price of a stock in market using which investors buy or sell stock. 
For e.g. If a company A has 1000 Outstanding Share and each share trades at ₹70, then the market value of company A is ₹70.

See Also : Difference Between Stand-alone And Consolidated Financial Statement

  • Its value changes based on demand and supply.
  • It is an accounting term and directly related to company’s fundamentals and accountings.
  • Dividend paid are based on market value of the  stock.

Face Value

It is the nominal value of a stock, declared in the beginning at the time of issuing shares to the public. It commonly have value like 1,2,5 or 10.
  • It does not changes based on demand and supply. Only changes in special cases like Stock split and Consolidation.
Note : Consolidation is defined as the process of combining assets, equity, liabilities and operating account of a parent company and its subsidiaries into one financial statement.

  • It is not an accounting terms and have nothing to do with company’s accounting and fundamentals.
  • Dividend paid are based on Face value of the stock.
Learn About : Dividend and Dividend yield
                       Definition Of Earning Per Share - EPS
                       

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