An Introduction To The Income Statement
the income statement is a report that measures a company's financial performance over a specific accounting period. the statement is also known by a number of other names, profit and loss statement and earnings statement. publicly traded companies must produce income statements along with balance sheets and cash flow statements for each quarter and each year in accordance with generally accepted accounting principles. the income statement shows a company's revenue, expenses and net profit from both operating and non-operating activities. it lists the company's net sales, cost of sales, gross income, selling, general administrative expenses, special or extraordinary items and other income and expenses which then ? the company's gross profit, operating profit, pretax profit and after tax profit. the income statement is divided into two parts, the operating and non-operating sections. the operating section shows the revenues and expenses associated with the company's regular business activities. in the non-operating section, the company reports any revenues or expenses not directly related to its regular operations, such as the sale of investments. generally, investors look to the income statement in hopes of seeing an increase in revenue or net sales and a decrease in expenses. the less money a company has to spend and the more money it earns, the more profitable it is.