What does an income statement measure?

An income statement measures a company's financial performance over a specific accounting period. It provides a summary of revenues, expenses, and profits or losses during that period, typically covering a quarter or a year. This financial document is crucial for assessing how well a company operates and generates income relative to its expenses.

The primary purpose of the income statement is to show the net profit or loss that the company experienced, which is fundamental for stakeholders, such as investors and management, to understand the profitability and operational efficiency of the business. This information is vital for making informed financial decisions, planning for future growth, and evaluating the overall health of the company.