Income statement provides a complete picture of the company's income and expenses during the year. Income Statement is very helpful as it helps financial analysts and investors understand the profitability of the company. Income Statement consists of items like Sales, Cost of Goods Sold, Selling General and Admin Costs, Depreciation Costs, and Income Taxes.
Top topics discussed in this Income Statement Basics sections are -
What is the Income Statement Format and Template?
What are the Costs of Goods Sold or COGS?
What are Direct Costs and Indirect Costs in Income Statement?
What are the Non-recurring Items?
What is the difference between EBIT and EBITDA on Income Statement?
What is Depreciation on Income Statement?
What are unrealized gains or losses?
What are noncash expenses?
What is stock-based compensation?
What are extraordinary items on Income Statement?
Difference between Capitalization and Expensing?
What is the difference between NOPAT and Net income?
What is the difference between tax credit and tax deductions?
Income statement is one of the most important financial statements investors need to look at if they want to invest into a company.
EBITDA is a measure of earnings before paying interest and taxes, arrived at by adding back depreciation and amortization and which is also widely used as a measure of a company’s operating performance.
EBIT defined as any company’s profit including, all expenditures just leaving income tax and interest expenditures, whereas EBITDA is net income added to amortization, depreciation, taxes and interest.
EBITDA is an indicator used for calculating the profit-making ability of the company, whereas Operating income is an indicator which is used to ascertain the amount of profit generated by the company’s operating activities.
Sundry expenses are those expenses done in the regular course of business but are random in nature and comprise of a small number of expenses compared to the overall expenses of the business, relatively unimportant and insignificant.
Tax credits can help to reduce the liability at a Dollar to dollar level but cannot reduce overall liability to less than zero. Tax deductions, on the other hand, lower the taxable income and are computed using the percentage of marginal tax bracket.
Revenue can be defined as income generated from a business when a service or a product is sold, whereas Earnings can be defined as the bottom line profit after excluding the expenses of a business from their business activities or operations.
Marginal costing is a method where the variable costs are considered as the product cost and the fixed costs are considered as the costs of the period. Whereas Absorption costing is a method that considers both fixed costs and variable costs as product costs.