Read your Profit & Loss like an accountant

Updated 10 October 2026 · 5 min read

Gross margin, cost ratios and comparisons: the four questions to ask of your P&L every month.

The Profit & Loss (Statement of Comprehensive Income) answers one question: did the business make money in this period? Read it top to bottom.

The layout

• Revenue — what you sold.
• Less: Cost of sales — what those sales cost you directly (goods, materials).
• Gross profit — what's left to pay for running the business.
• Other income, then Less: Expenses — rent, salaries, utilities and the rest.
• Net profit before taxation, then taxation, then net profit after taxation.

Four questions to ask every month

1. Is the gross margin holding? Tick With % of total sales in the report options: every line shows as a percentage of revenue. If gross profit was 35% of sales last month and 28% this month, prices, costs or the mix changed — find out which.
2. Which costs are growing faster than sales? Tick With % of operating expenses to see what share each cost takes, and compare months.
3. How does it compare? Choose the format Compare with same period last year, Compare with previous period or Budget vs Actual; the variance and variance % columns point straight at what moved.
4. What's behind a number? Click any line to open its General Ledger: every entry that made it up.

Profit is not cash: a profitable month can still leave the bank account empty if customers haven't paid. Read the P&L alongside the cash flow forecast.