Use our free income statement template to analyze your business performance. With Otto AI's bookkeeping expertise, keeping track of your finances is straightforward and accessible, helping you save time and reduce unnecessary costs.
An income statement shows your company’s income versus expenses to calculate profit. It's sometimes called a profit and loss statement (P&L), statement of operations, or statement of earnings. Income statements can be generated to track performance over a month, quarter, or year. They’re useful for reviewing cash flow and forecasting future business outcomes. Smart business owners review income statements along with other key documents, like the balance sheet and cash flow statement, to monitor and improve business health.
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An income statement shows a company's financial performance over a specific period. It starts with revenue, which includes money earned from selling goods or services. Expenses follow, covering costs like inventory, rent, and supplies. The profit or loss is determined by subtracting expenses from revenue. If expenses are lower than revenue, there’s a profit; if higher, there’s a loss. This statement provides a clear picture of business profitability.
The income statement formula calculates a company's profitability by subtracting total expenses from total revenue. It is structured as: Revenue - Expenses = Profit/Loss. Revenue refers to income earned from sales or services, while expenses include all costs incurred in running the business, such as operating expenses, materials, and overheads. A positive result shows a profit, while a negative result indicates a loss, helping businesses track financial performance over time.
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The income statement and balance sheet are key financial tools, each serving a unique purpose for business owners and investors. A balance sheet provides a snapshot of a company's assets and liabilities at a specific point in time. Meanwhile, the income statement outlines income and expenses over a set period (typically one year), helping you assess profitability and track growth.
An income statement reveals a company’s income and expenses over a given period, showing whether the business is profitable by subtracting expenses from income.
It helps business owners understand their company's financial performance, making it easier to track profitability, manage expenses, and make informed financial decisions.
This type of income statement separates revenue and expenses into operating and non-operating categories, offering a more detailed financial view and calculating gross profit.
A contribution margin income statement shows both fixed and variable expenses, highlighting the contribution margin alongside net profit.
