Income Statement

Definition: One of the three main financial statements. It shows the performance of a company over a period of time. Performance is measured as profit (aka net income), which is the difference between revenues and expenses. The income statement is also called a “profit and loss statement.”

Example: A simple income statement may show that in the past month the company had $100 of revenue and $60 of expenses for net income of $40.

Why It’s Important: The net income from an income statement is added to the owners’ equity. Many key metrics of the performance of a company can be calculated from the income statement.