Which financial measure indicates a company’s profitability over a specific period?

The income statement is the financial measure that specifically indicates a company’s profitability over a defined period. It summarizes the revenues, expenses, and profits or losses experienced by a business during that timeframe, providing insights into how well the company is generating profit from its operations.

This statement typically covers a set period, such as a quarter or a year, and is crucial for assessing the operating performance of the enterprise. Through key metrics such as gross profit, operating income, and net income, stakeholders can understand how effectively a company is managing its resources to generate earnings.

In contrast, the balance sheet provides a snapshot of a company's financial position at a single point in time, detailing assets, liabilities, and equity, without focusing on the profitability aspect over time. The cash flow statement tracks the flow of cash in and out of the business, which is important for liquidity but does not directly show profitability. The retention ratio, on the other hand, measures the proportion of net earnings retained in the business rather than distributed as dividends, but does not provide a comprehensive view of profitability. Thus, the income statement is the correct choice for assessing a company's profitability during a specific duration.