how to read Profit&Loss statement ?

In P&L statement there are two parts 

1 Incomes 

2 Expenses 

Let's see in detail 

1 Incomes or Revenue:

A- Revenue from operations: these earnings are from main business of a company.

For ex- if company has a business of cement manufacturing than Revenue from sales of cement is considered in this.

B- Other operating revenue: these earnings are from besides main business. (Ex- rent, Interest etc)

C- Total revenue : sume of A and B 

2. Expenses:

A- Cost of materials consumed: amount used in material cost of raw material (for ex in cement manufacturing raw materials are limestone, clay, silica)

B- Operating and direct expenses: Amount which use to operate business ane direct expenses like salary, rent, marketing expense, etc.

C- Employee benefit expense:employees receive these benefits besides their wage like insurance, pension etc. 

D-Financing costs: are defined as the interest and other costs incurred by the Company while borrowing funds. They are also known as “Finance Costs” or “borrowing costs”. A Company funds its operations using two different sources: 

1- equity finance 

2- debt finance 

E- Depreciation And Amortisation Expenses: depreciation expense used for the tangible assets (ex- if company bought a machine in 5 lakh which has 5 year age that means from time to time value of these machine will decrease this decrese value is called depreciation expense) 

Same for intangible assets decreased value called amortisation Expenses. 

F-Other Expenses: expense which not calculated in above section.

 

Total expenses = sum of all above expenses.

Profit before tax= Total income- Total expenses 

For 

Profit after tax = Total income- (Total expenses+ tax)