Join Rudolph Rosenberg for an in-depth discussion in this video Intro to the income statement, part of Financial Literacy: Reading Financial Reports.
- [Voiceover] The income statement is the second key document of the financial statement. Its purpose is to report on the business activity of the company. To be more precise, it focuses on the sales that have been made and the expenditures that have been necessary to fund the day-to-day activities of the company, and it concludes with the resulting profit or loss that has been made. This is the reason it is usually called the P&L, where the P stands for profit and the L stands for loss. The income statements reports on the business activity over a certain period of time, which means that it will report all the sales and expenditures activity between a start date and an end date.
As an example, the 2012 income statement reports all the sales and expenditures between the first of January and the 31st of December. The 2013 first quarter income statement could report the activity between the first of January and the 31st of March. I'm saying could report, as some companies have a fiscal year that starts at a different time than the first of January, and their quarters are therefore not the same as the calendar year quarters. The income statement has a set of categories that we will be reviewing individually.
Those categories are revenue, costs, gross margin, operating expenses, operating income, non-operating income and expenses, and net income.
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- What is a financial statement?
- Reading the balance sheet
- Understanding depreciation, liabilities, and equity
- Reading the income statement
- Understanding revenue, costs, profitability, and net income
- How cash flow works
- Analyzing financial documents with context<br><br>
- The PMI Registered Education Provider logo is a registered mark of the Project Management Institute, Inc.