QuickBooks Profit and Loss: Analyze It by Month

A year-to-date total tells you where you ended. The month columns tell you when it moved. A method for reading the P&L at each level and comparing it with last year.

To analyze a QuickBooks profit and loss by month, run it with monthly columns for two fiscal years, compute margin at each level, and compare each account with the same month last year. A single total hides when things moved. This post lays out that method so you can do it by hand, and then shows how to ask for it. It describes what the report shows and is not accounting or tax advice.

Read the P&L in four levels

The Profit and Loss has a structure worth using explicitly. Level one is income. Level two is cost of goods sold. Level three is operating expenses. Level four is other income and other expenses below the operating line. Each subtotal answers a different question.

Revenue
- Cost of goods sold     = Gross profit      (gross margin = GP / revenue)
- Operating expenses     = Operating income
+/- Other income/expense = Net income        (net margin = NI / revenue)

If net margin fell, the level that moved tells you where to look. Gross margin falling points at pricing or delivery cost. Operating income falling while gross margin holds points at overhead.

Why monthly columns matter

A year-to-date net income of a given amount can come from twelve steady months or from one strong quarter and a weak one. The monthly view shows which. It also exposes timing: an annual insurance bill booked in one month will make that month look poor and the others look better than normal. Put a mark next to any month with a known lump.

By hand, export the monthly P&L to a spreadsheet, put this year and last year side by side, and add three rows for the margins. Use an identical account list on both sides; accounts added mid-year will otherwise not line up.

Find the accounts that drifted

For each expense account, compute this year's months minus the same months last year. Sort by dollar change. The top five lines usually explain most of the movement in operating expenses. Percentages come second: an account that rose from a small base shows a dramatic percent and almost no dollars.

Example (illustrative), operating expenses, Jan-Jun
Account             This year   Last year   Change
Software             18,400      11,200     +7,200
Contractors          22,000      16,500     +5,500
Travel                4,100       6,900     -2,800
Rent                 30,000      30,000          0

The sentence you write is then specific: software is up 7,200 on the first half of last year, and contractors are up 5,500. That is checkable against the report in a minute.

Fix the basis first

Whatever you do, keep the basis constant. A cash-basis P&L and an accrual-basis P&L of the same company can differ materially month to month, particularly around receivables and bills. Comparing one year on each basis produces a difference that is not real. The company setting decides the report, and every comparison should name it.

Asking for it in Quiriz

The [QuickBooks] Profit and loss dataset has one row per account per month for this fiscal year and the two before it, matching the QuickBooks report, with a pl_level column (1 income, 2 cost of goods sold, 3 expenses, 4 other) and a basis column. The profit effect column is positive for income and negative for costs, so summing it gives net income. Metrics defined on it are Revenue, Cost of goods sold, Gross profit, Gross margin, Operating expenses, Operating income, Net income and Net margin. Ask:

• What was our gross margin by month this year?
• Which expense accounts grew the most compared with last year?
• How does net income year to date compare with the same period last year?

Because margins are defined once in Company Context, gross margin is the same ratio every time and the answer shows the filter it used. The connector is read-only, refreshes daily and is included in paid plans; QuickBooks is a generally available connector, not in beta. For a wider tour, see QuickBooks AI. If you also track time in Harvest, the Harvest and QuickBooks post covers matching client revenue to hours.

A worked example: margin that fell without revenue falling

Suppose revenue is flat across the first half, but net margin slid from 18 percent to 12 percent (an illustrative example). Reading by level: gross margin is steady at 55 percent, so delivery cost is not the issue. Operating expenses rose, and the drift table shows software and contractors accounting for most of it. The sentence you take to the meeting is then specific, and the question becomes whether those increases bought something.

Had gross margin been the thing that moved, the conversation would be about pricing, supplier cost or product mix. Without the levels you would have had a net margin number falling and no direction. The levels are the cheapest diagnostic in the report, and monthly columns make them readable.

Notes that make the analysis repeatable

Record three things next to every P&L you analyze: the date you ran it, the basis, and the fiscal year range. Restated or late-posted entries change prior months, and without the run date you cannot tell whether a difference is a business change or a bookkeeping one. If your fiscal year does not start in January, label months by fiscal period so a comparison lines up with the right year.

Limits

• Three fiscal years only: this year and the two before. Older comparisons need a different source.
• Data refreshes daily, so an entry posted this morning appears after the next refresh.
• Report basis is the company's own setting; the dataset cannot show the other basis.
• The P&L says what your books recorded. Whether an entry is classified properly is a question for your bookkeeper or accountant.

Frequently asked questions