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The Income Statement.
Member rating: No Rating | Words: | Submitted: Mon Jun 19 2006
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The Income Statement The role of the Income Statement (Profit and Loss Account) is to show the computation of the company's income (profits) in the current financial year. The different categories of profit are calculated by stating the revenues and expenses related to the current fiscal year against each other. In practice, there are two different approaches to prepare the income statement. I. Income Statement with a sales approach Income Statement, Year Ended December 31, 20... (in thousands of dollars) Net Sales..............................................................$ 10,000 (-) Cost of Sales.........................................................$ (6,500) (=) Gross Margin.......................................................$ 3,500 (-) Operating expenses..................................................$ (1,300) (+) Other revenues.......................................................$ 500 (-) Other expenses.......................................................$ (700) (=) Operating Income..................................................$ 2,000 (+) Financial revenues...................................................$ 800 (-) Financial expenses...................................................$ (600) (=) Income before taxes................................................$ 2,200 (-) Provisions for income taxes.........................................$ (396) (=) Income after taxes..................................................$ 1,804 (-) Dividends distributed to shareholders..............................$ (100) (=) Net income............................................................$ 1,704 Earnings per share (in dollars)..................................$ 3,61 (500,000 common shares outstanding) 1. Net Sales Net Sales is the total invoice price of the goods shipped or services rendered...
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