Finances Slide

Your P&L Chart

To build a profit and loss (P&L) chart you’ll need to summarize your company’s revenues, costs, and expenses for each year for three years. These are summed in a table to determine your income or loss, and then charted on a bar graph to show you’re going in the right direction. 

Create a spreadsheet to store your numbers. The numbers from the P&L chart could be considered a simplified version of the Income Statement. Having this will help internally document your growth.  In Drive in the Finances folder, there is a spreadsheet called Profit & Loss Chart. Feel free to update that with your own data. Or you can build one from scratch.

Here is the step-by-step to build a P&L chart.

Step 1. Define the Period of Time

Decide on the time frame for which you want to create the P&L chart. Investors usually want to see 3 to 5 years. If you have past operations, you can start two years back, the current year, and then two years forward. If you’re just getting started this year, just show the current year and two years forward.

In the spreadsheet, skip a column and enter each year in its own row.

Step 2: Gather Revenue Data

Collect all the data related to your company’s revenues for the chosen time period. This may include sales, service fees, subscriptions, or any other income generated by your business. Make sure to categorize the revenue data according to different sources or product lines, if applicable.

Step 3. Gather Cost of Goods Sold (COGS) Data

If your business involves selling products, you’ll need to gather data on the cost of goods sold (COGS). This includes the direct costs associated with producing or purchasing the goods that were sold during the chosen time period, such as raw materials, manufacturing costs, and direct labor costs.

Step 4: Gather Operating Expenses (OPEX) Data

Collect all the data related to your company’s operating expenses, which are the costs incurred in running your business. This may include salaries, rent, utilities, marketing expenses, insurance, and other general and administrative expenses. Categorize the expenses according to different functions, such as sales and marketing, research and development, and general and administrative.

Step 5: Calculate Gross Profit

Subtract the COGS from the total revenue to calculate the profit. This represents the profit made from selling goods or services before deducting operating expenses.

Step 6: Calculate Net Profit — or Income

Subtract the operating expenses from the gross profit to calculate the operating income (or loss), also known as Net Profit. This represents the profit or loss generated from the core operations of your business.

Step 7: Include Other Income and Expenses

If your business has any other sources of income or expenses not related to its core operations, such as interest income, investment gains or losses, or one-time charges, include them in the P&L chart.

Step 8: Calculate Net Income or Loss

Add or subtract the other income and expenses from the operating income to calculate the net income or loss. This represents the total profit or loss generated by your business during the chosen time period.

You’ll need to calculate revenue, expenses, and net income for all the years you plan to include in your chart.

Step 9: Create the Chart

Your spreadsheet should now have numbers filled in and up-to-date in for all the years you plan to chart. We recommend rolling up gross profit and other income, to simply show Revenue, COGS, OPEX, and Net Income in the spreadsheet you use to create the chart for you pitch deck. You can always have the more detailed version ready to show in case requested, but it’s nice to simplify for the chart you show in your pitch.

Using your cursor, select all the cells in your chart, including the row with years and column with titles. With cells selected, click Insert > Chart from the menu. create a chart that visually represents the data you have gathered and calculated. You can use a bar chart or a line chart to display the revenue, COGS, operating expenses, and net income or loss. Make sure to label the axes and provide a title for the chart. In the example spreadsheet we use a bar chart.

Step 10: Review and Analyze

Review the P&L chart to understand your financial performance.  Analyze the trends, identify areas of improvement, and use the information to make informed financial decisions.

Note: It’s important to consult with a qualified accountant or financial professional to ensure accurate financial reporting and interpretation of your company’s P&L chart. This information is just meant to get you started.