What is Income Statement?

The Income Statement, also known as the Profit and Loss (P&L) statement, is one of the three core financial statements. It reports a company's financial performance over a specific period (e.g., a month, quarter, or year) by summarizing its revenues, expenses, gains, and losses. The final result is the company's net income or net loss for that period.

For Startups: For a startup, the income statement is a crucial tool for understanding profitability. It shows whether the company's business model is working. Investors use it to analyze key metrics like gross margin and operating margin, and to track how expenses are scaling relative to revenue growth. A startup can be "pre-revenue," meaning its income statement shows only expenses and a net loss.

Example: A startup's monthly P&L shows ₹10 Lakhs in revenue and ₹8 Lakhs in total expenses, resulting in a net income (profit) of ₹2 Lakhs.