Analysis Intermediate: Understanding the Income Statement

Introduction to Understanding the Income Statement The Corporate Income Statement The Income Statement: Gross Profit on Sales The Income Statement: Operating Income The Income Statement: Earnings before Interest and Taxes The Income Statement: Net Earnings (or Loss) The Income Statement: Retained Earnings Income Statement Mnemonics Summary of Understanding the Income Statement
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The Corporate Income Statement

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The Corporate Income Statement

The income statement shows revenues and expenditures for a specific period, usually the fiscal year. Income statements differ by how much information they provide and the style in which they provide the information. Here is an example of a hypothetical income statement:

A Corporate Income Statement

Where to find them

Corporations generally publish their income statements in their annual reports as well as in quarterly filings. As an educated investor, you need to be able to make sense of a corporate income statement to analyze the company as an investment, and to compare it to other companies in its industry.