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…

Standalone And Consolidated Financial Statement


Financial Statement of a Company are of two types :
                                                             

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Standalone Financial Statement

 It is the Financial statement of a parent company alone, excluding other legal entities. Standalone treat each entity entirely separate For e.g. Parent company are unrelated to its subsidiaries and subsidiaries are unrelated to one other.

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Consolidated Financial Statement

 It is the financial statement of a parent company including its Subsidiaries, Joint Ventures, Associated Companies, etc. In this financial statement parent company and its branches are taken as a single company operating under a roof.

Difference between Stand-alone and Consolidated Financial Statement :

As we have discussed in Standalone we do not include other branches of a parent company and in Consolidated, Parent Company and its subsidiaries,etc are taken as whole to create financial statement.

Lets discuss this difference with an example for better understanding :

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Example : Alphabet Inc is a American Multi-national. It is the parent company of Google, Google Fiber, Chronicle, and several former Google Subsidiaries.
Here, Financial Statement of only Alphabet Inc excluding google and other subsidiaries will be the Stand-alone financial statement where as Financial statement of alphabet including Google, Google Fiber, Chronicle, etc will be the Consolidated Financial Statement of Alphabet Inc.

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