A P&L (profit and loss) statement is a financial document that shows a company’s revenues, costs, and expenses over a certain period of time, typically a month or a quarter. The purpose of the P&L statement is to show a startup’s financial performance and to help founders make decisions about how to improve it.

The P&L statement has two main sections: revenues and expenses. Revenues are the income a startup generates from its products or services. Expenses are the costs of running the business, such as salaries, rent, and materials.

The difference between revenues and expenses is the startup’s net income or loss. If revenues are greater than expenses, the startup has a net income. If expenses are greater than revenues, the startup has a net loss.

To read a P&L statement, start by looking at the top section, which shows the startup’s revenues. Then look at the bottom section, which shows the startup’s expenses. Subtract the expenses from the revenues to find the startup’s net income or loss.

It’s also important to look at the specific items that make up the revenues and expenses sections. Look for trends or unusual items that may indicate potential problems or opportunities.

It is always important to compare the current P&L statement to previous ones and to that of industry averages to see how the startup is performing over time and relative to its peers.