What is the main purpose of the income statement?

The main purpose of the income statement is to analyze profitability. This financial statement provides a summary of a company's revenues and expenses over a specific period, typically a quarter or a year. By presenting the various sources of revenue and the associated costs, the income statement enables stakeholders—such as investors, management, and creditors—to understand how well the company is generating profit from its operations.

Understanding profitability is essential because it reflects a company's ability to generate earnings relative to its expenses, investments, and other factors. Ultimately, the income statement helps assess the financial health of a business, guiding decision-making regarding investments, operational adjustments, and management strategies.

Other concepts like liquidity, capital expenditures, and equity summarization are important in financial analysis but do not capture the primary function of the income statement, which is focused explicitly on measuring and reporting profitability over a period.