▶ Watch: How to Read an Income Statement explained in 24 seconds
What it is
The income statement (also called the profit-and-loss or P&L statement) shows how much a company earned and spent over a period of time, usually a quarter or a year. It starts with revenue at the top and subtracts costs in stages until it reaches net income at the bottom. Unlike the balance sheet, it covers a span of time, not a single moment.
Why it matters
It tells you whether a business actually makes money and where its profit leaks away. Reading it well lets you separate a company that grows sales but loses money from one that turns sales into real profit.
How it's calculated
Read it in order: (1) Revenue (sales) at the top; (2) subtract cost of goods sold (COGS) to get gross profit; (3) subtract operating expenses (such as research, sales, and admin) to get operating income; (4) subtract interest and taxes to get net income. At each line ask what percentage of revenue is left — those are the margins. Compare the same line across several years to see the trend, and check whether revenue growth is keeping pace with cost growth.
How Quintarthai uses it
The company deep-analysis pages show a 10-year income statement on the Financials tab, with margins computed for you and trends Quinn can summarize.
Cross-border note. US companies report in US dollars under US GAAP; Canadian companies typically report under IFRS and may report in Canadian or US dollars — always check the currency label before comparing two companies' revenue or profit.
FAQ
What is the difference between revenue and net income?
Revenue is the total money from sales at the top of the statement. Net income is what is left at the bottom after every cost — COGS, operating expenses, interest, and taxes — has been subtracted. A company can have large revenue and still post negative net income.
Why does gross profit matter if there's already net income?
Gross profit (revenue minus COGS) shows how profitable the core product is before overhead. A falling gross margin can warn you of pricing pressure or rising input costs long before it shows up in net income.
Check your understanding
A company reports $500M in revenue but a negative net income for the year. How is this possible when reading the income statement top to bottom?
Net income is what remains after every cost is subtracted from revenue, so a company can have strong sales yet still lose money if its costs are higher.