# Income statement (P&L)

What a business earned and spent over a period, ending in profit.

It is where the asking price comes from, because the multiple is applied to earnings this statement reports, so every line a seller has understated or left out moves the price. Do not read it on its own. The version prepared for a sale and the version filed with the IRS are both true statements about the same year, and where they disagree is the most useful question a buyer can ask.

In numbers: Revenue of $2M less $1.2M of cost of sales and $600,000 of operating expenses leaves $200,000 of pre-tax profit, which is the line every [add-back](https://searchspheresource.com/glossary/add-backs) argument starts from.

Source: https://searchspheresource.com/glossary/income-statement
Not dated: A definition is editorial: what a term means, why it matters, and an example. None of it reads a source that can go stale, so there is no date to take and a stamped one would be the build time wearing a costume.

Site index for machines: https://searchspheresource.com/llms.txt