why are profit and loss p l statements important 
a profit and loss p l statement is one of the three types of financial statements prepared by companies the other two are the balance sheet and the cash flow statement the purpose of the p l statement is to show a company s revenues and expenditures over a specified period of time usually over one fiscal year investors and analysts can use this information to assess the profitability of the company often combining this information with insights from the other two financial statements for instance an investor might calculate a company s return on equity roe by comparing its net income as shown on the p l to its level of shareholder equity as shown on the balance sheet 