General Information
What does the income statement evaluate?
Profitability
The total sales a company makes from its products or services.
Revenue
The reduction in the value of a fixed asset
Depreciation
What is the other name by which income statement is known?
Profit and Loss
The expenses directly related to making the products sold, like materials and labor.
COGS (Direct costs of production)
Costs incurred in the process of generating the revenue
Expenses
How often are income statement shared?
Quarterly and annualy.
Ongoing costs to run the business that aren’t tied to production, such as rent and salaries for administrative staff.
Operating expenses
The difference between the revenue and the costs of goods sold
Gross Profit
What does income statement show?
Shows what a company earned and spent over a period of time
The money the company owes to the government based on its profits.
Taxes
The profit remaining after deducting operating expenses from gross profit
Operating Income
What role does it play in financial planning?
Assists in financial forecasting.
The final profit after subtracting all costs and taxes from revenue. It shows how much the company actually earned.
Net Income
It gives a clearer view of the profitability by focusing on the operational performance of a company
Earnings before interest, taxes, depreciation and amortization ( EBITDA