- Income Statement
- Income Statement | Top Examples | Template | Format | Analysis
- Income Statement Basics
- Income Statement Examples
- Income Statement Formats
- Income Statement Template
- Income Statement Formula
- Multi Step Income Statement
- Profit and Loss Statement Template
- Profit And Loss Statement Format
- Book Profit
- Contribution Margin Income Statement
- Sales Revenue
- Net Sales Formula
- Variable Costing Income Statement
- Pro Forma Income Statement
- Purpose of Income Statement
- Income from Operations Formula
- Cost of Goods Sold
- Cost of Goods Manufactured (COGM)
- COGS Formula
- Cost of Goods Sold Examples
- Cost of Sales Formula
- SG&A Expenses (Selling, General & Administrative)
- Interest Expense Formula
- List of Operating Expenses
- Non Operating Income
- Pretax Income (Earnings Before Taxes)
- Income Tax Expense
- Income Tax Accounting
- Earned Income
- Average Total Cost Formula
- Gross Profit
- Gross Profit Formula
- Direct Costs
- Indirect Costs
- Prime Cost
- Duty vs Tariff
- EBITDA Calculation
- Adjusted EBITDA
- EBIT (Earnings Before Interest and Tax)
- EBIT Calculation
- Net Operating Income
- Operating Income
- Turnover vs Profit
- Operating Profit vs Net Profit
- Net Income Formula
- EBITDA Formula
- Operating Expense (OPEX)
- Operating Expense Examples
- Interest Expense
- LTM EBITDA
- Non Recurring Items
- EBIT vs EBITDA | Top Differences | Examples | Calculation
- Depreciation – Formula | Types | Most Comprehensive Guide
- Depreciation Expense Formula
- Depreciation Rate
- Straight Line Depreciation Method Formula
- Accumulated Depreciation Formula
- MACRS Depreciation
- Depreciation Tax Shield
- Accelerated Depreciation
- Written Down Value Method
- Depletion Expense
- EBITDA vs Operating Income
- Straight Line Depreciation Method
- Sum of Year Digits Method of Depreciation
- Declining Balance Method of Depreciation
- Land Depreciation
- Double Declining Balance Method
- Amortization of Intangible Assets
- Depreciation vs Amortization
- Unrealized Gains (Losses)
- Non Cash Expense
- Warranty Expense
- Other Expenses
- Accrued Income
- Share based compensation
- Restructuring Cost
- Extraordinary Items
- Interest Income
- Lease Payment
- Financing Costs
- Effective Tax Rate Formula
- Progressive Tax
- Taxable Income Formula
- Completed Contract Method
- Tax Shield Formula
- Double Taxation
- Marginal Tax Rate
- Tax Haven
- Net Loss
- Pro-Forma Earnings
- Margin vs Profit
- Net Operating Loss (NOL)
- Tax Loss Carry Forward
- Tax Loss Harvesting
- Tax Shield
- Sundry Expenses
- Trade Discount
- Trade Discount vs Cash Discount
- Percentage of Completion Method
- Interest vs Dividend | Top 9 Differences (with Infographics)
- EBITDA vs Net Income
- EBIT vs Net Income
- EBIT vs Operating Income
- Above the Line vs Below the Line
- Operating Income vs Net Income
- Cost vs Expense
- Expense vs Expenditure
- Accounting Profit vs Economic Profit
- Income Tax vs Payroll Tax
- Tax credits vs Tax deductions
- Tax Evasion vs Tax Avoidance
- Sales Tax
- Excise Tax
- Indirect Tax
- Direct Tax vs Indirect Tax
- Tax Lien
- Value Added Tax (VAT)
- Ad Valorem Tax
- Estimated Tax
- Proportional Tax
- Marginal Tax Rate Formula
- Regressive Tax
- Regressive Tax Examples
- Gross Income vs Net Income
- Profit vs Revenue
- Revenue vs Earnings
- Revenue vs Net Income
- Revenue vs Income
- Profit vs Income
- Revenue vs Sales
- Revenue vs Turnover
- Capitalization vs Expensing
- Income Statement vs Balance Sheet | Top 5 Differences You Must Know!
- Statement of Comprehensive Income | Items | Colgate Example
- Variance Analysis
- Other Comprehensive Income
- Partial Income Statement
- Income Summary Account
- FOB Destination
- Explicit Cost
- Implicit Cost
- Direct cost vs Indirect Cost
- Fixed Cost
- Fixed cost vs Variable cost
- Price vs Cost
- Hard Cost vs Soft Cost
- Overhead Costs
- Nopat vs Net Income
- Marginal Costing vs Absorption Costing
- Marginal Cost Formula
- Margin vs Markup
- Markup Formula
- Contribution Margin vs Gross Margin
- Accounting Basics (80+)
- Bookkeeping (52+)
- Balance Sheet (30+)
- Assets (109+)
- Liabilities (68+)
- Shareholders Equity (91+)
- Cash Flow Statement (17+)
- Accounting Careers (27+)
- Accounting Books (8+)
- Budgeting in Finance (31+)
Income Statement Excel Template
An income statement reports a company’s income, expenses and thus derives its profit generated for a specific period of time (generally for a financial year). The attached excel template of an income statement is to be used for understanding how to calculate Net Profit from Gross Sales reported by a company. This Net Profit is important for any and all company’s reporting purpose, and this profit is used for further allocation of next year’s provisions and reserves and for payment of dividends to shareholders.
Explanation of Income Statement Template
- Gross Revenue: This is the earning from Gross Sales of the company. All expenses related to the sales are deducted after this starting point in the income statement.
- Cost of Goods Sold: All direct expenses in the manufacture or development of a product is accounted for under this header.
- Gross Profit: Profit derived by deducting Cost of Goods Sold from Gross Revenue.
- Operating Expenses: These operating expenses relate to indirect costs of the company’s product which is being sold and whose revenue is generated as a part of the Gross Revenue.
- Operating Profit: Income derived after deducting Cost of Goods Sold and Operating Expenses from Gross Revenue.
- Amortization Expenses: This is the averaged out amount of any capital expense carried out during the year based on the useful life of the improvement, for e.g. replacement of the roof of the property, which is a capital expense and the company may not want it to be reflected in the same year. Moreover, the use of such improvement is being made over a period of time which is also called the useful life of such a new roof. Hence such huge amount is divided into the same smaller amounts which can be reflected in the income statement every year.
- Depreciation: Depreciation is an expense which is given a similar treatment as amortized expense. A fixed asset tends to deteriorate in value each year, and such deteriorated amount is being accounted for in the income statement each year.
- Interest Expenses: Any interest expense that a company makes during the year for loans and advances.
- Tax: Commercial and industry-specific Taxes paid to the government (generally at 40%).
- Net Profit: This is the actual profit made by the company after all expense deductions.
Calculation of Income Statement Template Line Items
Given below is the calculation of each attribution of income statement template.
#1 – Gross Revenue (A):
- Sales made by the company. This is the starting point of the income statement template.
#2 – Cost of Goods Sold (B):
- Direct Costs associated with the manufacture/development of the product.
- Formula: (B) = Opening Stock (B1) + Direct Costs (B2) + WIP (B3) – Closing Stock (B4)
#3 – Gross Profit (C):
- Formula: (C) = Gross Revenue (A) – Cost of Goods Sold (B)
#4 – Operating Expenses (D):
- All indirect expenses related to the product(s)’ manufacture/development. This may be allocated to more than one products sold by the company depending upon the proportion of usage.
- Formula: (D) = Total Administrative Expenses (D1) + Total Selling Expenses (D2) + Other Indirect Expenses (D3)* Other Indirect Expenses can be elaborated further into sub-items depending upon items and reporting structure. These include Office Rent, Supervisor Salary, etc.
#5 – Net Operating Profit (E):
- Also called EBITDA (Earnings before Amortization, Depreciation, Interest, and Taxes)
- Formula: (E) = (C) – (D)
#6 – Earnings before Interest and Taxes or EBIT (F):
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- All Amortized and Depreciation expenses required to be reported by the company are deducted from Operating Profit (or EBITDA).
- Formula: (F) = (E) – Amortized Expenses – Depreciation Expenses
#7 – Earnings before Taxes or Profit before Taxes or EBT (G):
- All Interest expenses required to be reported by the company are deducted from EBIT.
- Formula: (G) = (F) – Interest Expenses
- This is an important component of the income statement, since till the above calculation (EBT), the company’s internal expenses are being reported that are related to the product and its manufacture/development. Hence, profit before taxes gives actual profit from income and expenses.
#8 – Profit After Taxes or PAT (H):
- This is the Net Profit derived after deducting Taxes from EBT.
- Formula: (H) = (G) – Commercial Taxes
- All companies are required to pay certain % of income to the government in the form of Taxes. Hence this amount to be paid is added to all other expenses related to the company’s performance.
The amount derived after calculation of PAT or Net Profit is further used for allocation of profits to reserves, dividend payouts and other provisions for the next year.
Relevance and Uses of Income Statement Template
- An important financial statement: The income statement is one of the most important financial statements which reports income generated by the company vis-à-vis the expenses it incurred in making such revenue.
- Analysis of performance by company: This statement reflects the total expenses made, and income made at each level accordingly. Such income at different levels is also used in the analysis of various factors in the performance of the company.
- Future predictions: With all data correctly and accurately reported by the company, the company can make its decisions for future projects.
- Market Research: Such income statements reported by companies are also used by research analysts for making industry level and sector level reports, which are further used by industry experts. This type of research is helping to make development decisions as well.
The success of an income statement depends on accurately reported statistics. However, it also depends on the right format used by the company to report the numbers. There are different formats approved by different financial reporting institutions globally, and companies generally follow a particular institution (like US GAAP or IFRS for US entities or IAS for Indian companies). However, the same data can be reported interchangeably into other formats with the same output. Using the income statement excel template, one can derive the actual profit made by the company for the year and accordingly make decisions for future investments and/or provisions. Any update should be incorporated to create the next version of this income statement template.
You can download this Income Statement Excel Template here – Income Statement Excel Template
This has been a guide to Income Statement Template. Here we discuss the Free Income Statement Excel Template along with step by step guide to calculate each line item. You can learn more about accounting from the following articles –