Income Statement (Profit & Loss)

The income statement starts with revenue (total sales), subtracts the direct cost of producing what was sold, operating expenses, interest, and taxes, and arrives at net profit - the actual bottom line. Reading it top to bottom shows exactly where a company's profit (or loss) came from: strong revenue but weak net profit often points to high costs eating into otherwise healthy sales. It covers a defined period (a quarter, a year), which is why it's often described as a 'video' of performance over time, in contrast with the balance sheet's single-date 'photo' of financial position.