The stability of a business is determined by its performance, or how well or poorly they are doing. This is usually measured over a specific accounting period. This performance is presented with the use of an income statement, which is also known as a profit and loss statement.

A financial statement shows the company’s earnings and expenses during the said accounting period. It provides details about the company’s financial performance, how the revenue is used and earned, where it is used for, and so on. A financial statement is used by companies to monitor and keep track of anything that is related to its financial needs.

Making an income statement might be a burden as this task involves calculating large amounts of money. Not to mention the fact that you will have to track all of the expenses and where they were spent on. Good thing we have here income statement samples and income statement templates that you can download for free. This will make your task easy and convenient.

Income Statement Template

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Personal Financial Statement

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Income Statement Example

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Monthly Income Statement

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Why Do Companies Use an Income Statement?

Companies, organizations, and businesses make use of income statement to keep track of their profit and losses. An income statement’s primary purpose is to show the profitability of an organization over a given period of time. This is not only an important matter that companies need to monitor, but it also plays an important role in the financial side of the business. Keeping track of the business’ profit and losses are essential so that all that has been earned and spent is beneficial to the business or company.

With the use of income statement, the investors and the management will be able to know if the company has earned or made money for a reported period of time. With the knowledge gathered from this report, the needed action or intervention can be planned and implemented in order to improve the business or bring it up in situations where it is not doing well.

Sample Income Statement

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Sample Document Income Statement

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Sample Statement of Income

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Financial Statement Sample

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What Are the Elements of an Income Statement?

Just like all other existing statements, documents, and contracts, income statements need to be complete and detailed so that it will be effective and useful. An effective income statement includes all of the essential elements that make it possible to do the necessary computations and present accurate and valuable data. Knowing about these elements will help you determine the efficiency and the accuracy of the income statement. You can check on the income statement samples in this article together with the list of its elements that we have provided below.

  • Net Sales Revenue – The very first thing that you will come across in an income statement is a net sales revenue, which is also called as the top-line revenue because of such reason. To run your company, you will need to have funds or money and this is where a sales revenue becomes important. The money earned from the product sales will be used to support the operations of the business.
  • Gross Profit – The gross profit provides details about how much was spent to produce a certain product, or how much was spent to acquire the said product or service. A gross profit is calculated by subtracting the cost of the goods from the sales of the goods or services. Other business expenses are not included in a gross profit, but it is an effective way to determine if the certain products and services are priced correctly or if the discounts provided appear to be too much.
  • Operating Income – This is the money that you have left for your business after all of your expenses have been paid. A healthy company will have a positive operating income, which means that the sales earnings are more than enough to cover that of the business’ operating expenses.
  • Net Income – The last part and basically the main concern of companies for using an income statement is the net income. It is the total amount of money that the company has earned overall. This part of an income statement tells exactly how much the company has earned from the sales and how large was the loss that it suffered.
  • Operating Expenses – The operating expenses of a business refers to how much is being spent to run the business. This includes regular day-to-day costs, the worker’s wages, maintenance, utilities, rent, cleaning supplies, and all other big and small stuff needed to run the business.
  • Problem Areas – This is where an explanation on why and how the business did not meet its expected target. This is also where a solution to the said problem is introduced and discussed.

 

Income Statement for a Small Business

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Yearly Income Statement

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Comparative Income Statement

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Income Statement

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What Is the Difference between an Income Statement and a Financial Statement?

Businesses produce various financial statements, each with different uses to help them track, monitor, and reflect on the finances of the said business. A financial statement is a document that provides a summary of the funds being entrusted to you by the stockholders and how they are being used. It also tells us about the current financial position of the company or the business.

There are three main financial statements and they are the balance sheet, the income statement, and statement of cash flows. An income statement is a type of financial statement. It provides the details about the profit and the loss of a business, as well as the expenses that have been spent for running the business. With that being said, an income statement is no different from a financial statement. It is rather a type of financial statement with the same purpose.

Statement of Income and Expenses

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Statement of Income and Expenses

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Statement of Income

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How to Calculate an Income Statement

There are a lot of things that you need to determine and calculate to be able to come up with the accurate income statement data. This is such a tedious work, that is why this task is only entrusted to financial professionals and those who have in-depth knowledge about profit and loss. No matter how hard it may be, there will always be a way for us to learn it. We have gathered sample computations and formulas that can help you with calculating the data of your income statement.

  • Operating income – The operating income of a business is calculated by subtracting the operating expenses plus the depreciation from the gross income.

Formula: Gross income = Operating income – (Operating Expenses – Depreciation)

  • EBIT – EBIT stands for earnings before interest and taxes. It is used to measure the profit of the company, which includes all of its expenses but does not include its interests and tax expenses. It is calculated by subtracting the operating expenses from the revenue.

Formula: EBIT = Revenue – Operating Expenses

  • Net Income – It is calculated by taking out the interest rate, depreciation, tax liabilities, and other expenses from the total income.

Formula: Net Income = Total Income – Interest rate, depreciation, tax liabilities, and other expenses

  • Cash Flow – It is the cash or amount of money that comes in and out of a business. It is also used for the dividends, buy stocks, expand the business, and pay off the debts of the business.

Formula: Cash Flow = Net Income + Depreciation +/- Other things that are charged to the income

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