The Engineering Executive's Primer

Appendix C. Reading a Profit & Loss Statement

Some years ago, I was explaining to my manager that I was feeling a bit bored, and they told me to learn how to read a Profit & Loss (P&L) statement. At the time, that sounded suspiciously like, “Stop wasting my time,” but operating in an executive role has shifted my perspective a bit: this is actually a surprisingly useful thing to learn. The P&L statement is a map of a company’s operation and is an effective tool for pointing you toward the most pressing areas to dig into.

While there is a lot of depth to reading a P&L, I’ll walk you from zero to one. In this appendix, we’ll cover:

• The components of a P&L statement

• The steps to review a P&L

• An example of applying those steps

• Instructions for finding public companies’ P&L statements to practice on

You may not be applying to Chief Financial Officer roles after finishing this appendix, but you should be more comfortable in executive meetings where financials are discussed.

What’s in a P&L Statement

In order to review a P&L statement, we need a P&L statement to read, and I’ve selected the “Summary Consolidated Financial Data” section from page 18 of HashiCorp’s S-1 filing, shown in Figure C-1. It’ll be helpful to have that at hand to refer to throughout.

Figure C-1. Summary financial data from HashiCorp’s S-1 statement

There’s a lot there! First let’s look at the top headers. The ...