What financial document would help assess a restaurant's profitability?

The profit-and-loss statement, often referred to as the income statement, is a crucial financial document for assessing a restaurant's profitability. This statement provides a detailed account of the revenues generated by the restaurant and the expenses incurred during a specific period, typically broken down into categories such as cost of goods sold, operating expenses, and other costs. By comparing total revenues to total expenses, the profit-and-loss statement reveals the net profit or loss of the business during that time frame.

Evaluating this statement allows restaurant managers and stakeholders to identify trends in revenue generation, control costs, and make informed decisions to enhance profitability. It's essential for monitoring performance over time and setting financial goals.

While the balance sheet offers a snapshot of the restaurant's financial position at a particular moment, detailing assets, liabilities, and equity, it does not provide direct insight into profitability over time. Similarly, the statement of cash flows describes how cash moves in and out of the business but does not specifically reflect profitability. The inventory report, while important for managing stock and controlling costs, does not directly assess overall profitability. Thus, the profit-and-loss statement is the key document for understanding a restaurant's financial performance regarding profitability.