What is a company’s Income Statement?

 

The Income Statement is one of three financial statements released by a company every quarter that allow investors an inside look into the company’s revenue, profit and expenses. The Income Statement, Balance Sheet and Cash Flow Statement are all found within a company’s 10-Q or 10 – K report filed with the Securities Exchange Commission.

Example below from Intel’s (INTC) 2012 2^nd quarter earnings.

(Click to Enlarge)

 

Common terms on a company’s Income Statement:

Revenue (or Sales) –

Cost of Sales –

Amortization –

Depreciation –

Operating Profit –

Gross Margin –

Net Income –

 

Common Fundamental Analysis ratios that use information from a company’s Income Statement:

P/E (Price/Earnings) ratio –

P/S (Price/Sales) ratio –

ROE  (Return on Equity) –

ROA (Return on Assets) –

 

 

 

See our step by step guide on reading and evaluating a company’s Income Statement here.

 

 

 

Financial Statements: A Step-by-Step Guide to Understanding and Creating Financial Reports, Defines this as:

“The income statement gives one important perspective on of a business-its profitability.

The income statement reports on making and selling activities of a business over a period of time:

• what’s sold in the period

• what it cost to make

• selling and general expenses for the period

• income for the period.”

 

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