Google Sheets Formula for Profit and Loss Analysis

Objective

To create a Google Sheets formula that calculates profit or loss based on revenue and expenses.

Formula Structure

The basic formula to calculate profit or loss is:

=Revenue - Expenses

Detailed Explanation

• Revenue: This refers to the total income generated from selling goods or services.
• Expenses: This encompasses all costs incurred in running the business or generating revenue.
• Profit/Loss Calculation: By subtracting expenses from revenue, the result indicates:
  • A positive value: Profit
  • A negative value: Loss
  • Zero: Break-even point

Example Implementation

Assume the following data is in your Google Sheets:

• Cell A1: Revenue (e.g., $10,000)
• Cell A2: Expenses (e.g., $7,000)

Formula Application

In cell A3, input the following formula to calculate profit or loss:

=A1 - A2

Result Interpretation

• If cell A1 contains 10000 and A2 contains 7000, cell A3 will display 3000, indicating a profit.
• If cell A1 contains 7000 and A2 contains 10000, cell A3 will display -3000, indicating a loss.

Summary

This straightforward formula effectively allows users to conduct profit and loss analysis within Google Sheets by simply inputting their revenue and expenses in designated cells. Understanding how to manipulate and interpret this formula is fundamental for any quantitative analysis in business contexts.

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