Overview
The income statement is a statement that indicates the revenues and expenses that have ocurred in the given period. The difference represents the profits earned during that period.
Sample Income Statement
The above represents a sample income statement, which typically contains the following sections.
- Revenue and Gross Profit
- Operating Expenses
- Other Revenue and Expense
- Taxes
Measures of Income
Despite the fact that the income statement reports two standard measures of income (see above), there are multiple different measures that are used for various purposes in financial modeling.
- EBITDA - earnings before interest, taxes, depreciation and amortization. Alternatively, it is net income with interest expense, tax expense, depreciation and amortization added back. This represents a rough measure of the cash generated by the business before paying taxes and financing expenses.
- EBIT - earnings before interest and taxes.
- Net Income - revenues minus expenses
- Comprehensive Income
- is a measure of income which hasnt
yet been realized and not related to the company's core operations. Examples include:
- Foreign currency translation adjustments
- Gains or Losses on investments or derivatives
- Pension gains or losses
When other comprehensive income is added to net income, the result is comprehensive income, which represents the total change in shareholders equity that is not attributable to owners injecting or withdrawing capital.