Income Statement

A financial statement that summarises revenue, costs, and expenses over a specific period, showing the resulting net profit or loss. Also known as a profit and loss statement or P&L.

The income statement is the primary document for understanding business performance. It shows whether the business is making or losing money and where costs are concentrated, guiding decisions on pricing, spending, and growth.

A founder reviews her quarterly income statement and notices marketing spend has risen to 35% of revenue while gross profit margin has fallen. She uses this to decide to raise prices and audit her ad campaigns before the next quarter.