Income Statement
Candlefocus EditorThe 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.