The Income Statement

The Income Statement - • There are multiple stakeholders...

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2. The Income Statement The Income Statement measures financial performance over a specific period of time. It includes the firm’s revenues (sales) and the expenses incurred in generating those revenues. Income = Revenues – Expenses 1
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Sample Income Statement 2 Earnings Before Interest and Taxes EBIT = Revenue – Operating Expenses
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Sample Income Statement 3 Net Income is NOT Cash Flow
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Sample Income Statement
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Unformatted text preview: • There are multiple stakeholders that have claims on cash flow, in the following order: Employees (S, G, & A expense) Creditors (interest expense) Government (taxes) Shareholders (dividends and reinvested earnings) 4 Things to Consider on I. S. • GAAP (accrual-based accounting) • Non-Cash Items • Profits vs. Cash • Earnings Management • Extraordinary and Non-Recurring Items 5...
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