Income Statement


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.


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.