What does an income statement show about a business?

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An income statement shows how well a business performed financially over a period by detailing revenues and expenses and ending with profit or loss. It covers a span like a month, quarter, or year, so you can see whether the company earned net income or incurred a net loss. Revenues are the money earned from operations, and expenses are the costs to generate those revenues. Subtracting expenses from revenues gives net income, which indicates profitability after operating costs. This differs from a balance sheet, which is a snapshot of assets and liabilities at a specific date, and from the cash flow statement, which tracks actual cash movements. Changes in stockholders’ equity come from the equity section and are influenced by net income as it increases retained earnings, rather than being the focus of the income statement itself.