Getting Started: The Income Statement

Making a profit: It's the hallmark of a successful business. So whether you're thinking about buying stock in a company , or you want to make sure that a current investment is still a good one, the income statement is a really important thing to look at. Now let's take a look at how to make the income statement make a profit for you.

What's an Income Statement?

First of all, the question should probably be "What is income?" For a company, as with an individual, net income is "take-home" pay. That means it's the money that a company records as profit at the end of "the day." The income statement is the financial statement that's used to get to that oh-so-important number.

An income statement is also sometimes referred to as a profit and loss statement (P&L) because the net income can either be a profit (positive net income) or loss (negative net income). The term "profit and loss statement" generally refers to something used by managers for internal accounting, not for the financial statements that investors are interested in. As far as the SEC is concerned, it's called an income statement, so that's what we'll call it. ...