How to Read a Profit and Loss Statement Like a CFO

Top line is revenue. Subtract cost of goods sold to get gross profit. Divide by revenue to get gross margin. Subtract operating expenses (sales, marketing, R&D, G&A) to get operating profit. Operating profit plus depreciation and amortisation equals EBITDA. Compare against industry benchmarks: SaaS gross margin typically 70-80 percent; agency gross margin 40-60 percent. Watch for trends: rising COGS as a percentage of revenue means input costs are climbing faster than pricing power. Rising opex without matching revenue growth means the business is scaling inefficiently.