Revenue, cost of sales, gross profit, operating profit, net profit — what each line really means.
Remember the pizza shop from Module 1? It survived its cash crisis, and a full year has now passed. In this module we read its actual financial statements — the same three documents every company on earth publishes, from a corner shop to Apple. Same rows, different number of zeros.
We start with the statement people quote most: the Profit & Loss.
The shape: a staircase going down
Every P&L is a staircase. You start at the top with all the money earned, and each step down subtracts a different kind of cost. What survives to the bottom is profit. Here is the pizza shop's year:
Rosa's Pizza — P&L for the year
$
Revenue
600,000
Cost of goods sold
(240,000)
Gross profit
360,000
Salaries
(180,000)
Rent
(60,000)
Marketing
(24,000)
Depreciation
(12,000)
Operating profit
84,000
Interest on loan
(4,000)
Profit before tax
80,000
Tax
(20,000)
Net profit
60,000
🔒
Keep reading with Pro
You are reading the free preview. Module 1 of every course is free forever — Pro unlocks the rest of this lesson, every other module of every course, removes ads, and adds workbooks and certificates.