Definition:

Income statement (also known as a profit & loss statement) is a snapshot of a company’s revenue and expenditures over a period of time. It indicates whether or not a company is profitable over the specified time period. Income statements are commonly produced showing annual and quarterly results for investors, and for internal management they may be reviewed on a monthly basis.

Example:

Why it matters:

An income statement shows how well a company is performing, and whether it is able to generate a surplus or profit while operating. Note that being profitable is not the same as generating cash. For that we need to refer to the cash flow statement.