Senior 5 Financial Statements: Income Statement

1) Total Revenue / Sales turnover / Net sales : is the value of the total amount of goods and services sold during a period of time (accounting year, quarter)

2) Costs of goods sold/ sales: is the direct cost of the goods that were sold during the period of time

P1) Gross profit: 1) – 2)

3) Overheads/ expenses: all indirect costs of production plus any other expense for the operations during the period of time including depreciation (the loss of value of fix assets)

P2) Operating profit: P1 – 3)

1.1) Non-operating income/ non-trading income: these are profits because of transactions not connected with the main product of the company, an example could be the after selling financial securities that from other companies that this company has purchased before.

4) Interests: all the interest paid because of debt during the period of time

P3) Net profit before taxes: P2) – 4) + 1.1)

5) Taxes

P4) Profit for the year / Net profit after taxes P3) – 5)

6) Dividends to shareholders: a percentage that is paid from P4) to the owners of the company

7) Retained profits: a pecentage of P4) that is kept to reinvest for the next period, is a reserve, and is increasing the total capital invested.

Depending on the country and legislation earnings = profits = income

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