CandleFocus

Income Statement

Candlefocus Editor
An income statement, otherwise referred to as a profit and loss statement, is a fundamental financial statement used to chronicle a company’s performance over a given period. This financial instrument provides insight into the profitability of a company by calculating the total revenue gained, total expenses incurred, and the resulting profit or loss generated. The result of this report helps a company understand how revenue, expenses, and overall operations impact the company’s bottom line.

The income statement helps a company determine their net income or net loss. Net income, or in some cases, a net loss, reflects the performance of a company by subtracting expenses from revenue. Expenses include items such as employee salaries, building or office leases, or any other operating or non-operating expense. Revenue, on the other hand, can include items such as sales from goods and services, interest income, or dividend income.

An income statement provides information about the profitability of a company without taking into account the company’s liquidity or asset position. Typically, an income statement includes information for a specified period, however companies may also generate an income statement for a specific event, such as a new product line. This information is helpful for understanding the impacts of a large one-time purchase or expansion.

The income statement is an essential financial tool for companies to measure their financial performance. It helps investors, creditors, and other stakeholders get a better understanding of what a company achieved in a given accounting period. Additionally, the income statement is a helpful tool for understanding how operations are effecting profitability. This data can help investors decide whether to buy, sell, or hold their current position in the company.

Glossary Index