Which financial document would be used to assess profitability over a specific period?

The income statement is the financial document utilized to assess profitability over a specific period. It summarizes revenue and expenses, allowing for the calculation of net income or profit. This document provides vital information on how much money a company earns by comparing total revenues to total expenses within a designated timeframe, typically covering a quarter or a fiscal year.

Using the income statement, stakeholders can analyze whether the business is generating sufficient revenue to cover its costs and to what extent it is profitable. The key figures presented in the income statement, such as gross profit, operating income, and net profit, serve as indicators of the company's financial performance.

While the cash flow statement and balance sheet provide important insights into liquidity and overall financial health, respectively, they do not specifically focus on profitability over a period. The cash flow statement details cash inflows and outflows, while the balance sheet presents a snapshot of assets, liabilities, and equity at a specific point in time. The budget report often outlines planned versus actual financial performance but does not serve as a direct measure of profitability during a given period. Thus, the income statement is distinctly designed to evaluate and present profitability efficiently.