What is a profit and loss statement?

The profit and loss statement or income statement shows how much the company made during the fiscal period and how much it spent to make that amount. The profit and loss statement is an important indicator of how well the company's business model works at providing profits that can justify its liabilities that won't be clear from the balance sheet, or reveal that expenses accrued are not showing up on the cash flow statement. Using all three statements can allow investors to determine whether to hold or sell their shares and tell lenders how risky it may be to loan to this business in the future.