> For the complete documentation index, see [llms.txt](https://docs.fabricplan.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.fabricplan.com/planning-tutorials/5-build-a-p-and-l-hierarchy-with-measure-model.md).
# 4 - Build a P\&L hierarchy with Measure Model
In this tutorial, you will build and configure a *Measure Model* by organizing native and formula measures into a hierarchical P\&L structure, then create two scenarios in the Tree layout and compare them to see the real-time impact of revenue growth and cost restructuring on Net Profit.
### Prerequisites
Before you start this tutorial, make sure to complete the first three tutorials:
* [Introduction to planning in Microsoft Fabric](/planning-tutorials/1-introduction-to-fabric-planning.md)
* [Allocations and collaboration](/planning-tutorials/2-allocations-and-collaboration.md)
* [Optimize input values](/planning-tutorials/3-optimize-input-values.md)
This tutorial uses the plan app and the Fabric SQL database you created in the previous tutorials.
### Configure a measure model
In this section, you set up the planning sheet and build a simple P\&L model using the Measure Model feature. Organize native measures into a parent-child hierarchy using formula measures to turn a flat list of inputs into a structured P\&L model.
1. In *Northwind\_FMCG\_Plan*, select **New Planning Sheet** in the **Home** ribbon. Enter *P\&L – Measure model* and select **Create**.
2. Configure the field assignments from the P\&L Measures table as follows:
| Field | Value |
| ------- | --------------------------------------------- |
| Rows | Region hierarchy— Region → Cities |
| Columns | Date hierarchy—Year, Quarter, Month |
| Values | All the measures from the P\&L Measures table |
3. Double-click each measure label and remove the "Sum of" prefix to improve readability. Select the three dots (⋮) next to *Avg Selling Price* in the **Values** field and select **Average** from the dropdown. This populates the average selling price instead of the summed value.
4. Navigate to the **Model** ribbon and select **Measure Model**. The measure model canvas opens.
5. To create a formula measure for *Gross Revenue,* first drag *Sales Volume* and *Avg Selling Price* into the **Drop from measure list** section at the bottom of the canvas.
6. Select **Add Measure** > **Formula**. Name it *Gross Revenue* and enter the formula `[Sales Volume]*[Avg Selling Price]`. Select **Create**.
{% hint style="info" %}
Ensure the row and column aggregation type is set to Formula for all the formula measures you create.
{% endhint %}
* *Gross Revenue* is added to the measure list.
7. Drag the new *Gross Revenue* measure onto the canvas. Drag the *Sales Volume* and *Avg Selling Price* onto the Gross Revenue row — the measures snap into place as children. Observe that *Gross Revenue* becomes the parent of *Sales Volume* and *Avg Selling Price*.
8. Drag *Discounts and Returns* onto the canvas. Follow the same steps to create a *Net Revenue* measure by using the formula `[Gross Revenue] – [Discounts and Returns]`.
9. Drag *Net Revenue* onto the canvas. Then drag Gross Revenue and Discounts and Returns under the Net Revenue row. Observe that *Net Revenue* becomes the parent of *Gross Revenue* and *Discounts and Returns*.
10. Create a formula measure for COGS by using the formula: `[Raw Material Cost]+[Labor Cost]+[Other Direct Exp]`. Drag the COGS measure onto the canvas.
11. Select *Raw Material Cost*, *Labor Cost*, and *Other Direct Exp*. From the **Insert Measure** dropdown, select **COGS**, then select **Insert**.
The *COGS* measure becomes the parent of *Raw Material Cost*, *Labor Cost*, and *Other Direct Exp*.
12. In the same way, create the following measures:
| Measure | Formula |
| ------------------ | ----------------------------------------------------------------------------- |
| Gross Profit | `[Net revenue] – [COGS]` |
| Operating Expenses | `[Admin Expenses]+[Employee Expenses]+[R&D]+[Selling and Marketing Expenses]` |
| Net Profit | `[Gross Profit] – [Operating Expenses]` |
The final pnl hierarchy is shown in the following image:
### View the P\&L Model
In this section, you will view the P\&L model in the Measures in Rows layout.
1. Select **Back to Home** at the top of the measure model canvas. In the **Planning** ribbon, select the **Layout** dropdown and select **Measures In Rows.**
2. Observe that the configured measure hierarchy is now displayed — a structured P\&L view of the calculated measures and their underlying components, replacing the flat list from the setup step.
### Create best case and cost restructuring scenarios
In this section, you create two scenarios in the Tree layout — one to simulate revenue growth in *Sydney* and one to simulate restructuring costs in *London*.
#### Create best case scenario
In this section, you create a Best Case scenario in the Tree layout and simulate revenue growth in Sydney. The measure hierarchy updates in real time as you adjust each input.
1. In the **Planning** ribbon, select **Layout** and select **Tree**. The P\&L model displays in tree view, breaking down from the grand total through region and country with the measure hierarchy.
2. Select **Display** in the **Tree View** ribbon. In the **Display Settings** side panel, turn off **Show Header KPI**.
3. Select **Create Scenario** and name it *Best Case.* Ensure that all measures from the semantic model are included in the series, and click **Create**.
4. Under the *Asia Pacific* region, select the *Sydney* card. The simulation dialog box opens.
5. In the *Measure Simulation* dropdown, simulate the following under *Gross Revenue*:
* Sales Volume: 5%
* Avg Selling Price: 2%
* Discounts and Returns: −5%
8. Close the simulation dialog. Observe that the *Sydney* card updates in real time — *Net Profit*, *Gross Profit*, and *Net Revenue* show the upward variance indicators as each input is adjusted. The *Asia Pacific* and the *All* cards also update to reflect the change.
#### Cost Restructuring scenario
In this section, you create a *Cost Restructuring* scenario and simulate reduced costs in *London*. This scenario lets you compare a cost-focused approach against the Best Case revenue-growth approach.
1. Select **Create Scenario** and name it *Cost Restructuring*, ensure that all measures from the semantic model are included in the series, and select **Create**.
2. Confirm you can see the new scenario in the bottom left. Under the *Europe* region, select the *London* card. The simulation dialog box opens. Select **Value**. Scroll down and simulate the following under COGS and Operating Expenses:
* Raw Material Cost: 400k
* Labor Cost: 150k
* Employee Expenses: 120k
* Selling and Marketing Expenses: 160k
3. Close the simulation dialog box. Select the down arrow on the *London* card and *Europe* cards. Observe that the cards update in real time — the full P\&L cascade is visible on the card, showing how the restructured cost inputs flow through COGS, Operating Expenses, Gross Profit, and Net Profit.
### Compare Scenarios
In this section, you compare the Best Case Scenario with the Cost Restructuring scenario by using the Compare Scenarios feature.
1. In the **Tree View** ribbon, select **Compare Scenario**.
2. Configure the comparison with the following settings:
* **Compare**: Best Case
* **With**: Cost Restructuring
3. Observe the variance columns — the compare view places both scenarios side by side at every level of the hierarchy, making the difference immediately visible between a revenue growth approach and a cost restructuring approach.
4. Click **Exit Compare** to return to the tree view.
---
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