Profit and Loss

What is this page about: The Profit and Loss statement (P&L) measures your company's financial performance over a specific period, showing revenue, expenses, and resulting profit or loss. This page explains the P&L's structure, how to generate and read it in Light, how revenue and expenses are recognized, how to analyze it across periods, entities, currencies, and segments, how it compares to budget, and how to export it.

# On this page

• P&L structure
• Key P&L formulas at a glance
• Accessing the P&L in Light
• Interpreting P&L accounts
• P&L analysis metrics
• Revenue recognition on the P&L
• Expense recognition and matching
• Multi-period P&L analysis
• Multi-entity P&L
• Multi-currency P&L
• Segment reporting
• Cost center tagging
• Budget vs. actual comparison
• Year-to-date (YTD) reporting
• Pro forma P&L and forecasting
• P&L footnotes and disclosure
• Exporting P&L data
• Frequently Asked Questions
• Related articles

The Profit and Loss statement (P&L), also called the Income Statement, measures your company's financial performance over a specific period. It shows revenue earned, expenses incurred, and resulting profit or loss. The P&L is essential for evaluating profitability, identifying cost drivers, and assessing business performance against targets.

# P&L structure

In Light, the P&L organizes accounts into sections:

Revenue (sales):

• Product revenue: Sales of goods
• Service revenue: Sales of services
• Subscription revenue: Recurring billing
• Other revenue: Licensing, royalties, etc.

Total revenue shows your top-line financial performance.

Cost of goods sold (COGS): Direct costs to produce goods or deliver services:

• Materials
• Labor
• Manufacturing overhead

Gross profit = Revenue - COGS. Shows profitability before operating expenses.

Operating expenses: Costs to run the business:

• Sales and marketing
• Research and development
• Administrative and general
• Depreciation

Operating income = Gross Profit - Operating Expenses. Shows profit from core business operations.

Other income/expenses: Non-operating items:

• Interest income or expense
• Gain/loss on asset sales
• Foreign exchange gains/losses

Profit before tax = Operating Income + Other Items.

Tax expense: Income taxes owed.

Net profit = Profit Before Tax - Tax Expense. Bottom-line profitability.

# Key P&L formulas at a glance

# Accessing the P&L in Light

Generate your P&L statement:

1. Navigate to Planning & Reports → Reports
2. Select the reporting period (start and end dates)
3. Select entities to include (single entity or consolidated)
4. Select currency (Entity Crcy or Group Crcy)

Light updates the report live as you change these filters, formatted by revenue, expense, and profit categories.

Good to know: Light automatically leaves out accounts with no balance in the selected period, so the P&L shows only lines with activity. Section headings, subtotals, and totals always appear.

# Interpreting P&L accounts

Here's how Light structures each line of the P&L, so you know exactly what you're looking at:

Revenue accounts: Represent sales of products and services. Show before returns and discounts.

Discount and returns accounts: Reduce gross revenue to net revenue (revenue after typical reductions).

Cost of goods sold: Direct costs that vary with production or service delivery. Excludes overhead and administrative costs.

Gross margin = Gross Profit ÷ Revenue. Percentage of revenue remaining after direct costs. High margins indicate pricing power or efficient operations.

Operating expenses: Fixed and variable costs to operate the business. Include all support functions.

EBITDA = Earnings Before Interest, Taxes, Depreciation, and Amortization.

A metric showing operating profitability before financing and tax impacts. You can add EBITDA as a custom formula line (Operating Income + Depreciation + Amortization) in a custom table report, or use Text to chart to generate one from a prompt — it's a custom metric rather than a built-in P&L line.

Interest expense: Cost of borrowed money. Shows on P&L when debt is outstanding.

Tax expense: Income taxes owed based on taxable income. Includes current and deferred tax.

Good to know: Some companies show tax as a percentage (effective tax rate) as well as absolute amount for stakeholder understanding.

# P&L analysis metrics

Key performance indicators derived from the P&L:

Gross margin % = Gross Profit ÷ Revenue

Shows profitability on each sale before operating expenses.

Operating margin % = Operating Income ÷ Revenue

Shows profitability from core business operations.

Net margin % = Net Profit ÷ Revenue

Shows bottom-line profitability. Industry-specific benchmarks exist.

Operating leverage: How much expenses increase relative to revenue growth.

In Light's custom table reports, you can add ratio lines using the PERCENT formula, which divides one set of report lines by another. See Custom reports and filters.

# Revenue recognition on the P&L

Revenue appears on the P&L in the period it's recognized, which may differ from cash receipt:

• Accrued revenue: Earned but not yet invoiced
• Deferred revenue releases: Invoiced but recognized over future periods
• Sales returns: Reduce revenue in current period

Light's P&L reflects economic reality (when you earned the revenue) rather than cash timing, so it stays true to how the business actually performed in the period.

# Expense recognition and matching

Expenses appear on the P&L in the period incurred, which may differ from cash payment:

• Accrued expenses: Incurred but not yet paid
• Depreciation: Systematically allocating asset cost over useful life
• Prepaid expenses: Releasing prepayment as benefit is consumed

This matching principle ensures Light's P&L reflects the true cost of earning revenue in each period.

# Multi-period P&L analysis

Compare P&L to prior periods:

1. Navigate to Planning & Reports → Reports
2. Use the Comparison filter to add a prior period (1, 3, 6, 9, or 12 months back) or a prior year (1, 2, or 3 years back)
3. Light displays revenue, expenses, and profit side-by-side
4. Shows variances and percentage changes
5. Click any line to drill into supporting transactions

This identifies profit drivers and problem areas.

# Multi-entity P&L

Light is built for organizations with multiple entities:

• Generate P&L for each subsidiary or division
• Generate consolidated P&L combining all entities
• View inter-company eliminations
• Analyze P&L by entity, geography, or business line

Once inter-company accounts are set up, Light automatically eliminates inter-company transactions in consolidated reporting.

# Multi-currency P&L

Report P&L in different currencies:

1. Navigate to Planning & Reports → Reports
2. Select Currency: Entity Crcy or Group Crcy
3. Light displays amounts in your selected currency. Group Crcy always shows the group currency code alongside the label (e.g. Group Crcy EUR). Entity Crcy shows a currency code when the selected entities share a single local currency (e.g. Entity Crcy USD).

For multinational companies:

• Select Entity Crcy to view an entity's P&L in its own functional currency. If the selected entities have different local currencies, the currency selector shows an error ("Selected entities have different currencies") and the report won't generate in that view — switch to Group Crcy to combine them
• Select Group Crcy to translate all entities to the group currency, as required for consolidation
• Group-currency figures use the group-currency amount recorded on each transaction when it was posted, adjusted by any FX revaluation runs you post — so consolidated results stay consistent with your ledger

# Segment reporting

In Light, analyze P&L by business segment:

1. Navigate to Planning & Reports → Reports
2. Use Custom properties configured for your organisation (e.g., department, geography, or product line) to break down the data
3. Review revenue and expenses by segment, department, or operational unit
4. Identify which segments drive profitability

This supports strategic planning and resource allocation.

# Cost center tagging

Cost center is an optional attribute you can tag on individual transactions and journal entries, where it's set up for your organization. To analyze profitability by department or operational unit, use Custom properties as described in Segment reporting above — cost center tagging labels transactions rather than serving as a P&L reporting dimension on its own.

# Budget vs. actual comparison

Budget comparison is done on the Budget page rather than in ledger reports:

1. Navigate to Planning & Reports → Budget
2. Upload a budget scenario as a CSV file
3. The budget overview shows actuals vs. planned amounts per period, with YTD variance and planned-accuracy statistics
4. Click any cell in the budget table to drill into the underlying ledger transactions

See Budget scenarios for details. Investigate variances >10% to understand performance drivers.

# Year-to-date (YTD) reporting

In Light, view cumulative P&L from year start:

1. Navigate to Planning & Reports → Reports
2. Set the date range from the start of your fiscal year to today
3. Light shows cumulative revenue and expenses since year start

Compare YTD performance to budget or prior year for mid-year assessment.

# Pro forma P&L and forecasting

Light supports forecasting by letting you bring in an external projection and track actuals against it; it doesn't generate the projections itself. To maintain a forecast:

1. Build your projection outside Light (e.g., in a spreadsheet), using exported P&L data as the baseline
2. Upload the projection as a budget scenario CSV on the Budget page
3. Compare actual results against the forecast as the year progresses

You can maintain multiple scenarios simultaneously — for example a base plan and a stress-tested downside case. Use for planning and to communicate with lenders or investors. See Budget scenarios.

# P&L footnotes and disclosure

Comprehensive P&L reporting includes footnotes:

1. Accounting policies: Revenue recognition policy, expense recognition timing
2. Significant items: One-time gains/losses, restructuring charges
3. Segment information: Profitability by business line
4. Related party transactions: Transactions with affiliated parties
5. Subsequent events: Items occurring after period-end

Prepare footnotes outside Light as part of your financial statement package, using exported report data to support the underlying schedules.

Tip: Separate discontinued operations and one-time items from continuing operations for clearer performance analysis.

# Exporting P&L data

In Light, export your P&L for external distribution or analysis:

1. Generate the P&L report
2. Click the export button
3. Light downloads a CSV file containing all rows and columns as displayed

You can open the CSV in Excel or Google Sheets for further formatting and distribution. Drilldown transaction lines can also be exported as CSV.

# Frequently Asked Questions

# What is a Profit and Loss statement (P&L)?

It's a financial report, also called the Income Statement, that shows revenue earned, expenses incurred, and the resulting profit or loss over a specific period.

# How do I generate a P&L report in Light?

Go to Planning & Reports → Reports, then set the reporting period, entities, and currency. Light updates the report live as you change these filters.

# Can I compare P&L across periods, entities, or currencies?

Yes:

• Periods — use the Comparison filter for prior periods or years
• Entities — generate consolidated or per-entity reports
• Currencies — choose Entity Crcy or Group Crcy

# Does Light calculate EBITDA automatically?

You can add EBITDA (Operating Income + Depreciation + Amortization) as a custom formula line in a custom table report, or use Text to chart to generate one from a prompt. It isn't calculated automatically as a built-in line.

# Can Light forecast or project future P&L?

You can build a forecast outside Light and upload it as a budget scenario CSV to compare against actuals. Light doesn't generate the projections natively.

# How do I export P&L data from Light?

Generate the report, then click the export button. Light downloads a CSV with all rows and columns as displayed; drilldown transaction lines can be exported the same way.

# Related articles

• Reporting overview
• Balance sheet
• Cash flow statement
• Trial balance
• Budget scenarios