What information does a profit and loss statement summarize?

A profit and loss statement, also known as an income statement, provides a summary of a company's revenues, costs, and expenses over a specific period, typically a fiscal quarter or year. This financial report is crucial as it reflects the company's operational performance, showing how much money was made (revenues) and the costs incurred (cost of goods sold and operating expenses). The difference between total revenues and total expenses results in either a profit or a loss.

This information helps stakeholders assess the company's ability to generate profit from its operations, manage its costs, and evaluate overall financial health. Understanding the components of a profit and loss statement is essential for analyzing financial performance, making informed business decisions, and strategizing for future growth.