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some investors consider the income statement to be the most important financial statement in analyzing a companys performance now the income statement is also known as the statement of operations or the p l statement where p l stands for profit and loss why do we call it that because thats exactly what the income statement tells us whether the company earned a profit or loss during a given period of time okay so is this company making any money how do we know that we take all the companys revenues and we subtract all the companies expenses and that gives us the companys net income or if the expenses exceed the revenues the companys net loss so its telling us did this company earn a profit did they lose money during the prior quarter the prior year and so forth now if we take the income statement we compare it to the prior period income statement we can also see whether sales are increasing or decreasing and whether the companys profits are increasing or decreasing and thats he
