Income Statement

Definition

A report (quarterly/annual) that depicts the operating performance of a company.

Line item #1

Net Revenues: Total dollar payment for goods and services.

Line item #2

COGS: direct cost of manufacturing/procurement.

Line Item #3

Gross Profit: Revenues - COGS

Line item #4

SG&A: Non-manufacturing/procurement operating costs (Payroll, wages, commissions, etc.)

Line item #5

R&D: Costs with developing new products or procedures

Line Item #6

EBITDA: Earnings Before Interest Taxes Debt & Amortization

Line Item #7

Depreciation and Amortization

Line Item #8

Other Operating Expenses/income: Operating expenses not allocated to COGS, SG&A, R&D, D&A

Line item #9

Operating Profit (EBIT): Earnings Before Interest & Taxes

Line Item #10

Interest Expense: Amount paid on a debt owed.

Line item #11

Interest Income: Company's income from cash holdings/investments

Line Item #12

Non-operating Items: Items peripheral to core operations. Gains/Losses on Investments, Revaluations.

Line Item #13

Income Tax Expense: Tax liability of company

Line item #14

Net Income: EBIT-Net interest Expense-Other Non-operating Income-Taxes.

Line Item #15

Basic Earnings Per Share (EPS): Net Income/Basic Weighted Average Shares Outstanding

Line Item #16

Diluted EPS: Net Income/Diluted Weighted Average Shares Outstanding

Revenue

Proceeds from the sale of goods and services.

How revenue is measured in long-term projects

Percentage of Completion Method: Revenues recognized on the basis of % of total work completed during the accounting period.

COGS

Direct costs, Cost of Goods Sold

Gross Profit

Profit only after direct expenses (COGS) have been accounted for.

SG&A

Operating expenses not included in COGS or directly associated with the production or procurement of the product/service.

R&D

Costs associated with Research and Development

Depreciation Expense

Annual expense of a depreciating asset

Annual Depreciation Expense formula

Original cost - Salvage Value / Useful life

Most common method of depreciation

Straight-Line. Cost/Useful life

Other forms of accelerated depreciation

Declining balance

Sum of years digits

Units of production

Amortization Expense

Depreciation but for intangible assets

Stock Based Compensation Expense

Stock options/Restricted stock

Other Operating Expenses/Income

Gains/Losses on sale of fixed assets

Gains/Losess from a legal settlement

Restructuring expenses and severance costs

Losses due to inventory spoilage

Non-Operating Income and Expenses

Income and expenses not tied to the core operations of the business

Other Non-operating Items

Anything else not mentioned below operating profit

Tax Expense

Taxes paid, often not accurate due to ability to defer taxes

Net Income

Represents income after all expenses, final measure of profitability

Shares Outstanding

Number of shares of common stock outstanding. Shares issued - Treasury Stock

Treasury stock

Stock repurchased by company

Basic shares outstanding

only actual shareholders

Diluted shares outstading

include potentially dilutive security holders

Dilutive securities

securities that can be converted into common stock

Earnings Per Share (EPS)

Net Income/shares outstanding

Common Dividends

Portion of a company's net income that is returned to shareholders

Earnings Before interest and Taxes (EBIT)

Used to compare performance to other companies

EBITDA

more frequent