What is the primary purpose of a Profit and Loss Statement?

The primary purpose of a Profit and Loss Statement, also known as an income statement, is to summarize a company's financial performance over a specific period. It provides a detailed breakdown of revenue, costs, and expenses, ultimately showing the net profit or loss during that time frame. This financial summary allows stakeholders, including management, investors, and creditors, to assess the company’s operational efficiency and profitability. By analyzing the profit and loss statement, one can evaluate how effectively the business is generating profit relative to its expenses, making it a crucial tool for decision-making and strategic planning.

The other options do not accurately represent the overall function of the Profit and Loss Statement. While it may indirectly relate to tax liabilities or investment considerations, these are not the primary focus. Also, tracking sales trends is a narrower function, often explored through additional analyses beyond the scope of a Profit and Loss Statement. The statement is comprehensive, encompassing more than just sales or incomes, hence its vital role in summarizing financial performance and position.