A company’s profit and loss (P&L) statement, also commonly known as an income statement, can be found in the annual financial reports that all publicly traded companies are required by law to issue and distribute to shareholders. Annual financial reports include a company's P&L statement as well as a balance sheet and a statement of cash flow. In addition to fulfilling the legal requirement of providing financial reports to stockholders, financial statements can also commonly be found on a company's website.
Most companies, both public and privately held, make annual financial reports freely available and distribute them to shareholders, market analysts, portfolio managers, employees, and potential customers, investors or creditors. The majority of companies use their annual financial reports as a marketing and advertising tool to enhance their corporate image. In addition to the specific reports required to be included (P&L, balance sheet, cash flow statement), a company usually includes management discussion and analysis. This section is used by company management to present the best possible interpretation of the company's various financial statements and to give the best overall impression of the company's business prospects going forward.
P&L statements serve a variety of purposes for different groups. Management examines the statement attempting to identify ways to reduce costs or otherwise increase profits. Employees' interest in the P&L statement primarily pertains to salary negotiations and concerns about job security. Creditors and investors use the P&L statement to help them evaluate whether to invest capital in the company.
The P&L statement shows all of the revenues received and all of the company's costs and expenses, along with a bottom line figure of the company's net profit for the time period the statement covers. In additional to the annual financial statements required by law, many companies also publish quarterly financial statements.