What is an income statement?

An income statement is indeed a report that provides a summary of a company’s income and expenses over a specific period, typically a quarter or a year. It reflects the company’s financial performance by detailing how much revenue was generated and what expenses were incurred to produce that revenue. The end result shows net income or loss for the period, which is crucial for evaluating the profitability and operational efficiency of a business.

This statement is fundamental in financial analysis and is one of the key components of a company's financial statements, alongside the balance sheet and the cash flow statement. Understanding the income statement allows investors and analysts to assess a firm's past performance, make predictions about its future financial health, and help in making informed investment decisions.