Definition: The financial statement that measures the profitability of a firm over a period of time, such as one year. 

See Also: Balance sheet , financial statements , gross profit , cost of goods sold , expense , capitalize .

Tips: Expenses are deducted from sales and other revenue sources to arrive at net income . Often called a Profit & Loss Statement (P&L) or a statement of earnings . Savvy investors compare several years of balance sheets to ensure the balance sheets tie into the income statements. This analysis can take as little as 30 minutes and can provide a quick opinion as to the overall quality of a business's financial statements.