The income statement — also called the profit and loss statement (P&L) — shows how much money a company earned and spent over a specific period (month, quarter, or year). The bottom line tells you whether the business made a profit or loss.
It starts with revenue at the top, subtracts COGS to get gross profit, then subtracts operating expenses to get operating income, and finally subtracts taxes and interest to arrive at net income.
Investors study the income statement to understand how efficiently a company generates profit. Is revenue growing? Are margins improving? Is the company spending too much? All these answers are here.