An income statement is one of the major financial statements that report a company financial performance over a certain period. It is an entire component of a company’s financial statement and the result of income statement shows company net income or net loss. The statement is used to show external and internal stakeholders either the company made or lost money during the recording period. It shows a company’s revenues which followed by their cost of goods sold, their expenses or any other sources of income. It is important that the income statement states financials over a certain period while balance sheet just shows a single point in time. Well, this financial document will officially explain the reporting period of time in which a company may make a certain amount of income. To all appearance, this statement wills also explain how much company spent to produce that income. An income statement is a simple and straightforward report on a business cash generating ability.
Thus, an income statement may properly summarize a data about the gross profit of company. Yeah! This important document may cover the parts of the statement depend on your business perspectives. Somehow, it’ll also explain how the business is pricing their products correctly. In like manner, this official statement will tells the people why company discounting too much on products, or why company earning so much profit from a single product. Nonetheless, a smart income statement template may overlay interpret about the operating expenses of company along with the net earnings.