What does the income statement primarily show?

The income statement is a key financial document that summarizes a company's revenues and expenses over a specific period, ultimately resulting in net income or loss. It provides a clear picture of how much money the company has earned from its operations (revenues) and how much it has spent (expenses). The resulting net income indicates the profitability of the company during that period, which is critical for stakeholders, including investors and management, to assess financial performance and inform future business decisions.

While other financial statements like the balance sheet and cash flow statement provide insights into different aspects of a company’s financial health—such as its assets, liabilities, owner's equity, and cash flow activities—it is the income statement that focuses specifically on operational performance through the lens of revenues and expenses.