Financial StatementsBeginner
Income Statement
Profit & Loss statement
The report that shows a company's revenue, expenses and profit over a period.
Detailed explanation
It starts with revenue at the top and subtracts costs step by step: cost of goods, operating expenses, depreciation, interest and tax. What remains at the bottom is net profit. In India it is called the Statement of Profit and Loss.
Formula
Net profit = Revenue − All expenses − Interest − Tax
Example
Revenue ₹500 cr, total expenses ₹420 cr, interest ₹10 cr, tax ₹18 cr → net profit ₹52 cr.
Why it matters
It tells you whether the business actually makes money and where the money goes.
Key points
- Covers a period (quarter or year), unlike the balance sheet.
- Read top line (revenue) and bottom line (net profit) together.
- Accrual based: sales are counted when earned, not when cash arrives.
Related terms
More in Financial Statements
Educational content only. Definitions and examples are illustrative and are not investment, tax or legal advice.