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Income Statement
| ✪ Income Statement (Sample) |
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The Income Statement, also known as the Profit and Loss (P&L) Statement, is a financial report that provides a snapshot of a company's financial performance over a specific period of time. It summarizes the revenues, expenses, and resulting net income or net loss of a business. This statement is crucial for understanding a company's profitability and identifying areas for improvement. By analyzing the income statement, you can gain insights into revenue generation, cost of goods sold, gross profit, operating expenses, and net income or loss. A well-structured income statement can help businesses track their financial progress, identify trends, and make informed decisions to improve profitability. This statement is crucial for understanding a company's profitability and identifying areas for improvement. By analyzing the income statement, you can gain insights into:
A well-structured income statement can help businesses track their financial progress, identify trends, and make informed decisions to improve profitability. For a better understanding of how to read an Income Statement (aka P&L Statement), check out our blog post The Anatomy of an Income Statement. |
The Income Statement:
Key Concepts & Connections
Concepts Related to the
Income Statement
The Income Statement is one of the three core Financial Statements, and its primary purpose is to show a company's Profitability over a specific period. It starts with your total Revenue, subtracts the Cost of Goods Sold (COGS) to find your Gross Profit, and then subtracts all Operating Expenses to arrive at the Bottom Line: your Net Income.
The Income Statement
in Action:
The Adventures of Coco and Cami
At the end of her first month, Cami wants to know if she "made money." She knows she sold a lot of coffee, but she also bought a lot of beans, milk, and paid her new barista. She has no idea if she actually came out ahead.
Professor A generates Cami's first Income Statement. He walks her through it line by line, showing her total sales, subtracting the cost of her coffee beans and milk (COGS), and then subtracting her other expenses like rent and payroll. At the bottom, she can clearly see her net profit for the month, and for the first time, truly understands her business's performance.