Profit and Loss Statement (Income Statement)

March 19, 2025 by David in Uncategorized

Comprehensive Income Statement for Business Owners

📖📖 It is crucial to have an understanding of how your business finances operate, especially if you are a new small or medium-sized business owner. Reviewing your revenue, expenses, or cash flows can provide a clearer picture of the steps necessary to advance your business.

📎Here is an overview of one of the five essential financial statements that small and medium-sized business owners should focus on:
Comprehensive Income Statement (Income Statement).

📎Arguably the most important financial statement for a business is the Income Statement, which helps analyze profitability and guide business decision-making.

The income statement includes your total revenues and total expenses incurred over a specific period.

📎You can use this information to determine the company’s overall profit or loss for the reporting period.

The income statement also helps you identify which of your products are the best sellers. You can observe which products generated the most revenue during a given timeframe and then compare how this has changed from the previous year or month.

🔎🔎🔎 How to read (and understand) an income statement:
📎When reviewing the income statement, keep in mind the primary income formula:
Net Income = Revenue – (Cost of Goods Sold + Expenses).

For this reason, the report is also known as a Profit and Loss Statement. It shows whether you have made a profit or incurred a loss during the period.