The four financial statements

Income statement · also called the statement of operations, statement of earnings or profit and loss

Did it make money?

Read it from the top down. It starts with everything customers paid (sales), takes away the cost of making what was sold, then the costs of running the company, then interest and tax. What is left at the bottom is profit (net income), the part that belongs to shareholders. It covers a stretch of time: a year, or a quarter.

• People usually check: Are sales growing compared with a year earlier?
• People usually check: How much of each dollar of sales is left at each step (the margins)?
• People usually check: Is profit growing faster or slower than sales?