unit 2 Income statement

terms

income statement

Financial statement showing a company's revenues and expenses over a period of time. Also called the Profit & Loss Statement (P&L)

Revenue / Sales

Money generated from selling goods or services.

Net Sales

Gross sales after subtracting returns and allowances.

Top Line

Another term for a company's sales/revenue.

Cost of Goods Sold (COGS)

Direct costs associated with the products a company sells.

gross profit

The amount remaining from sales after COGS is deducted

Gross Profit Margin

Gross profit expressed relative to sales; an important measure of how much is available to cover operating expenses.

Operating Expenses

Normal business expenses other than COGS, such as advertising, R&D, SG&A, repairs, and management salaries.

SG&A

Sales, General & Administrative expenses; a type of operating expense.

R&D

Research & Development costs; a type of operating expense.

Depreciation

A non-cash expense recognizing the wearing out of fixed assets.

Amortization

A non-cash expense associated with intangible assets.

Operating Income / Operating Profit

Profit generated from the company's operations. Another name for EBIT.

EBIT

Earnings Before Interest and Taxes; measures operating profitability without considering financing or taxes.

EBITDA

Earnings Before Interest, Taxes, Depreciation & Amortization; a rough cash-flow measure, but not true cash flow.

Interest Expense

The cost of debt.

EBT

Earnings Before Taxes; also called Profit Before Taxes.

Taxes

Taxes deducted from earnings before arriving at net income.

Net Income

The company's final earnings/profit after expenses, interest, and taxes.

Bottom Line

Another term for Net Income.

Dividends

Part of net income that is paid to shareholders.

Retained Earnings

Earnings that are kept in the company rather than paid out as dividends.

Average Tax Rate

Total tax divided by taxable income; mainly a backward-looking accounting/reporting measure.

Marginal Tax Rate

The tax rate applied to the "next dollar" earned; used when evaluating incremental company decisions.