Income statement
A financial report showing an entity’s revenues and expenses over a period, culminating in its profit or loss.
Revenue: Income earned from an entity’s ordinary activities before expenses are deducted. Revenue is the starting point for calculating operating and net income.
Gross profit: Revenue remaining after the cost of goods sold is deducted. This first subtotal separates sales performance from later operating costs.
Financial statement analysis: The evaluation of financial statements to assess an entity’s performance, position, and prospects. It combines income statement figures with other reports to interpret results.
Balance sheet: A financial statement reporting an entity’s assets, liabilities, and equity at a specific date. It reports financial position at a point in time, unlike this period-based performance report.
Cost of goods sold: The direct costs attributable to goods or services sold during a period. Subtracting it from revenue yields gross profit.
Operating income: Profit from ordinary operations before interest and income taxes. It isolates operating results from financing and tax effects.
Profit margin: A ratio measuring profit as a proportion of revenue. Income statement subtotals provide the numerator for several margin measures.
Cash flow statement: A financial statement summarizing cash inflows and outflows from operating, investing, and financing activities. It tracks cash movement, which can differ substantially from income under accrual accounting.
Operating expenses: Costs incurred in running an entity’s ordinary operations, excluding direct production costs. These costs are deducted after gross profit to calculate operating income.
Earnings before interest and taxes: A measure of profit before interest expense and income tax expense. It often corresponds to operating income, though definitions can differ.