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…

Trading Vs Investing


Trading and Investing are very similar to each other but has few significant differences. Both are executed in a similar manner, on a similar platform but with different perspective. It is very important to understand the difference between these two, specially for beginners.

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But before moving on, i will suggest you to take a eye on technical and fundamental analysis of a stock.You can click on the link below to quickly understand what is Technical and Fundamental analysis.

Link : Technical And Fundamental Analysis

Trading

Trading basically refers to Buy and Hold stocks for short-term to generate profit. The one who trades called Trader. It is done based on Technical analysis of a stock i.e. generating profit using price movement. Traders purchase shares when the price goes down and sell it when the price rise up again. The most common example of trading is Intraday trading (buy and sell stocks within a day). Trading is generally done with the motive to generate minimum profit of around 10-15% in a month. But trading consist high risks as it is widely based on past price movement and short-term prediction, and if the price does not move according to your planning then you will end up losing your money. Trading does not requires much knowledge you just need focus and some skills to understand price movement of particular stock. Most of the beginners comes in trap of trading because it can give you good return in short-term but it is very risky. Sometimes you will be able to get consistent success in generating good profit but always remember luck does not works every time, one wrong move and you will end up losing all of your money, so don’t become greedy.

Investing

Investing refers to Buy and Hold shares for long-term or even for decades to generate wealth (huge profit). The one who invests called Investors or Value Investors. Value investors usually holds shares for 5-10 year or sometimes even more waiting for the right time to earn multibagger returns. Investing is done based on Fundamental analysis of the stock. Investors go through every details of the company before investing. They only invest with motive to earn multibagger returns with patience. Invest is less risky but requires lot of time and knowledge to deeply understand a company and its fundamentals. It also requires patience, as patience is the most essential key of investing. You need to be patient and let your money works for you. Just do proper analysis, take right decisions and believe in yourself with patience and you will get success for sure. Always try invest your time in gaining more and more knowledge. Read about successful investors and their journey, it will help you to take right decisions and avoid mistakes. Read books like One Up The Wall Street, Intelligent Investors, Rework, etc. these are one of the best book written on value investing. 

Note : Always keep in mind, Trading can only give you extra penny but Investing builds wealth for investors.

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