How much money am I making? How are certain actions affecting my business? How much do I owe in taxes? What are my problem areas? Is my budget accurate?

The Profit and Loss Statement (P & L), also called the Income Statement or Earnings Statement, is one of the most valuable financial reports for viewing the status of your business. It measures your revenue and expenses during a specified period of time and shows your financial progress for that time period. The massive amount of numbers listed on the P & L statement can often be confusing and intimidating but understanding what they all mean can help you answer the important questions listed above.

The P & L Statement is creating by accumulating all of your settlement information and receipts for a time period and sorting the information into like categories such as fuel, maintenance, revenue, truck payments, etc. Each category is totaled and entered into its own line on your P & L Statement. In order for your statement to be useful, the information you see needs to be as complete and accurate as possible.

The Profit and Loss Statement employs a very basic formula.

Gross Revenue - Expenses = Net Income or Profit.

Going into more detail such as to the type of revenue and a breakout of individual expenses enables you to analyze your business and make adjustments going forward to increase your profitability.

Your Profit and Loss Statement should follow general reporting guidelines and should be designed with revenue and expense items unique to a trucking business. Things can change quickly in your world so receiving statements monthly is critical in making timely business decisions. The following are items that should appear on your monthly P & L Statement.

• Miles. A summary of loaded, empty and total miles driven.
  
• Income. Mileage or percentage of load pay and miscellaneous income, which includes your fuel surcharge pay, stop pay, detention pay or any other accessorial revenue.
  
• Expenses. Broken out between Fixed Costs and Variable Costs. Your P & L statement should also give you the CPM for each expense.
• Total Expenses. Fixed Costs and Variable Costs added together.
• Net Income before Tax. The amount left after total expenses are subtracted from your gross revenue. This is your profit and is also the amount that is used to calculate the taxes you owe.
• Cash Advances. These are listed separately as they are not part of the Net Income equation.

The P & L Statement is a useful tool that gives you a snapshot of how you're doing for a specified period of time. Next time I'll talk about how to increase it's usefulness as an analytical tool.