Income Statement Definition | Finance Strategists | Your Online Finance Dictionary

hi i'm rainey with finance strategist in this lesson we're going to cover [Music] the income statement is one of the company's core financial statements that shows their profit and loss over a period of time the profit or loss is determined by taking all revenues and subtracting all expenses from both operating and non-operating activities the income statement is one of three statements used in corporate finance and accounting the income statement displays the company's revenue costs gross profit selling and administrative expenses other expenses and income taxes paid and net profit in a coherent and logical manner the statement is typically divided into monthly time periods which are aggregated into total values for quarterly and annual results components of an income statement the income statement may have minor variations between different companies but the most common income statement items include revenue and sales this is also known as the top line since it is the top line of the income statement cost of goods sold or cogs a line item that aggregates the direct costs associated with selling products to generate revenue gross profit calculated by subtracting the cogs from sales revenue selling general and administrative or sg a expenses all other indirect costs associated with running the business ebitda or earnings before interest tax depreciation and amortization calculated by subtracting sg a expenses excluding amortization and depreciation from gross profit depreciation and amortization expense non-cash expenses that are created by accountants to spread out the cost of capital assets such as property plant and equipment or ppnd operating income or ebit the profit before any non-operating income non-operating expenses interest or taxes are subtracted from revenues interest expenses expenses incurred through the borrowing of money determined by the debt schedule other expenses slash income such as fulfillment technology research and development or r d gains and losses on the sale of investments and many other expenses that are industry or company specific ebt or earnings before tax also known as pre-tax income and is found by subtracting interest expense from the operating income income taxes the relevant taxes charged on pre-tax income net income or net profit also known as the bottom line since it is the bottom line on the income statement it is calculated by deducting income taxes from pre-tax income and is the amount that flows into retained earnings on the balance sheet after deductions for any dividends let's hear from you if a company's income statement shows a large research and development expense what might that suggest about the company leave a comment below for more information visit finance strategists strategies for you you

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