The income statement

Last time we learn that what is Financial Statements?

As i promised, I am here to explain each part of Financial Statement in details, so let’s start.

The income statement

Income statement, we already known it as “Profit & Loss Account”.

The income statement is an essential part of the financial statements that an organization releases. The income statement presents the financial results of a business for a stated period of time. The statement quantifies the amount of revenue generated and expenses incurred by an organization, as well as any resulting net profit or loss.

 

The income statement may be presented by itself on a single page, or it may be combined with other comprehensive income information. In the latter case, the report format is called a statement of comprehensive income.

There is different format to present Income Statement globally, but majorly following format as below:

Microsoft P&L

Basic points that you need to kept in mind before analyzing statement is:

  • History of entity, whose financial statement you want to analyse.
  • Basic understanding of Accounting Standers followed by entity such as IFRS, Ind As, etc.
  • Basic understanding of Main function / Service / Product of Entity.
  • Basic understanding of Taxation Laws of that country in which such financial statement published.
  • basic understanding of market share of company in total market.
  • and such other thing as you required to know from that analysis.

 

The Statement of Income basically shows you the performance of entity in specified period. You will get to know that hoe much sales made by company and what is the gross profit from operation and also net profit after deducting Financial expenditures. Income statement mainly shows, Revenue, Cost of Production / Service, Other related cost, Net Profit, Depreciation, Taxation Cost and Earning Per Share.

We will continue our discussion on this Financial Statement.

Thanks.

 

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