Investors Need to Know: The Income Statement Doesn't Tell You About Business Health

When it comes to analyzing a company’s performance, many people often encounter the term Profit and Loss Statement or งบกำไรขาดทุน (P&L), which is a financial document that serves as the business’s “diagnostic report,” indicating the company’s financial health.

Why is the profit and loss statement important to investors and management?

Over 90% of investors rely primarily on the Profit and Loss Statement when making investment decisions because this document shows:

• Profitability of the business over different periods
• Sources of revenue and where they actually come from
• Cost structure—where money is flowing out and how much
• Potential for profit improvement through cost reduction or revenue increase

Additionally, the profit and loss statement is fundamental in strategic planning because management can see what adjustments are needed to ensure sustainable growth.

What exactly is the (P&L)?

The profit and loss statement is a financial document that summarizes a company’s operational results, showing:

• Total revenue earned during the specified period
• Costs and expenses incurred to support operations
• Final result—whether it is a profit or a loss

The key point of the Profit and Loss Statement is to clearly indicate: after deducting expenses from revenue, how much money is left or how much money has been spent.