What is P&L?
5 min read
A P&L (Profit & Loss statement) is the most important report in your business. It shows you whether you're actually making money — not just moving it. Most Egyptian brands never have one. That's a serious problem.
The P&L formula
Revenue − Cost of Goods Sold = Gross Profit. Gross Profit − Operating Expenses = Net Profit. That's it. The challenge isn't the math — it's getting the right numbers into each category.
Revenue: what counts?
Revenue is what customers paid for products you actually delivered. Not orders placed. Not cash you received from the courier (which includes returns and fees deducted). Revenue = delivered orders × selling price. Returns reduce revenue, not just cash flow.
COGS: your biggest variable
Cost of Goods Sold is what you paid for the products you sold. If you bought a product for 80 EGP and sold 50 units this month, your COGS is 4,000 EGP — regardless of whether you paid the supplier yet. COGS moves with sales volume.
OPEX: the costs that don't change with sales
Operating Expenses are your recurring business costs. Rent, salaries, marketing spend, packaging, software subscriptions. Some are fixed (rent), some are variable (ads). But all of them reduce your gross profit before you arrive at net profit.
Why cash in your account isn't profit
You might have 50,000 EGP in your bank and still be unprofitable. Maybe you just sold inventory you bought 3 months ago and haven't restocked yet. Maybe you haven't paid this month's salaries. The P&L shows the economic reality of your business — not just your cash balance at a point in time.
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