Income Statement / P&L Statement

A financial statement that reflects a company’s financial performance over a defined period of time. Also referred to as a “profit and loss” statement. The primary purpose of an income statement is rooted in summarizing corporate revenues and expenses as they evolved over a specific timeframe.

When a public corporation files performance and financial disclosures with the U.S. Securities and Exchange Commission, it must generally file an income statement as an element of that mandatory reporting. As corporations are generally required to submit financial reporting on a quarterly basis (data submitted for the fourth quarter is usually filed within the broader context of a corporation’s comprehensive annual report), income statements tend to be generated on a regular basis. These snapshots provide investors and stakeholders with a sense of a corporation’s recent revenues, expenses, losses and gains. In a nutshell, income statements explore the numerical side of how a corporation’s net revenue has recently evolved into net earnings, for better or for worse.

What does these calculations tell investors on a practical level? Income statements illustrate whether a company is operating efficiently, whether it is underperforming, whether it is generally profitable at present and provides a baseline for analyzing how a corporation is functioning relative to other like companies.

 

EXAMPLE:

Accountant: “I would like you to look over this income statement before I submit it as part of our quarterly SEC reporting.”

Executive: “Okay. Is there anything in particular you would like me to weigh in on?”

Accountant: “Can you explain why the company recently spent over $4,000 on Funyuns?”

Executive: “…No?”

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