The income statement shows whether the business has been able to generate profit over a specific period. It is a film of the company's activity over time, not a static snapshot like the balance sheet. It details sales and other income, the costs needed to produce and sell, staff and overhead expenses, and finally the financial and tax result that leads to the final profit or loss. Analysing the income statement helps you understand the profitability of the business, how efficiently costs are managed and how margins evolve. It also helps you detect whether profits come from the core business or from one-off items, which is key to judging whether results are sustainable.

• Sales and other income generated by the business.
• Operating costs and expenses (supplies, staff, overheads, depreciation and amortisation).
• Financial result, taxes and final net result.

• A positive result indicates that the business generates value and profitability.
• Analysing the margins (gross, operating and net) shows in which part of the business money is made or lost.
• Recurring net income is a sign of stability; large swings point to one-off or extraordinary factors.